U.S. factory activity accelerates in December

U.S. factory activity accelerates in December

The numbers:The Institute for Supply Management (https://www.instituteforsupplymanagement.org/about/MediaRoom/newsreleasedetail.cfm?ItemNumber=31000) said Wednesday its manufacturing index rose to 59.7%, the second-highest reading of the year, from 58.2% in November.

The strength in almost every industry created "a really strong report" meaning the sector is now in its 16th consecutive month of expansion, explained Timothy Fiore, chair of ISM's Manufacturing Business Survey Committee. Fifteen industries reported expansion, while only one reported a decrease in employment. The 2017 average was 57.6 and was made possible through strong domestic business investment and increased household spending, despite a dip in November following a number of devastating hurricanes.

What happened: Sixteen of the 18 industries tracked by ISM reported growth.

According to ISM, any reading above 50 points shows an increase in factory activity. "The customers' inventories index declined and remains at low levels".

The inventories index registered 48 points, up 1.5 points from the previous month.

Readings above 50 indicate expansion in the manufacturing industry. That indicated that manufacturers were still adding jobs but at a slower rate.

New orders jumped in December to the highest level since January 2004.

"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".

The Prices Index was 69 percent in December, a 3.5 percent increase from last month, and representative of higher raw materials prices for the 22nd consecutive month. Order backlogs have grown for 11 consecutive months.

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