Manufacturing Activity Expands in December, New Orders Index Nears 70%

Manufacturing Activity Expands in December, New Orders Index Nears 70%

Growth in the US economy's manufacturing sector unexpectedly improved in December, according to data from the US Institute for Supply Management.

The ISM, a trade association of purchasing managers, said 16 of 18 manufacturing industries expanded in December.

The New Orders Index increased 5.4 points to 69.4 in December, indicating growth for the fifteenth consecutive month.

Looking at other key measures in the report, production (up from 63.9 to 65.8), supplier deliveries (up from 56.5 to 57.9) and imports (up from 54.5 to 57.5) also increased more briskly in December.


Two readings of the nation's manufacturing sector showed solid increases in December with one showing the strongest growth in almost three years while another report showed construction spending hit a record high. Fifteen industries reported expansion, while only one reported a decrease in employment. "However, the strengthening of demand for raw materials has led to supply chain delays, which have in turn been increasingly linked to higher prices as a sellers' market develops".

Readings above 50 indicate expansion in the manufacturing industry. Price increases continued at a faster rate. Two industries reported contraction during the period: wood products and textile mills.

Meantime, a new report from the Commerce Department showed the value of construction spending in November increased 0.8% from the downwardly revised October level, hitting a new high of $1.257 trillion. Heading into 2018, it will be interesting to see if these trends continue or if production levels can pace closer to new orders.

"The improvement was fairly broad based, with the production and supplier deliveries components both rising and the forward-looking new orders index seeing a particularly encouraging leap.Admittedly, the employment index fell back to 57.0, from 59.7, but it is still consistent with manufacturing payrolls continuing to expand at a healthy pace".

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