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

Economic activity in the manufacturing sector expanded in December, and the overall economy grew for the 103rd consecutive month, the Institute for Supply Management reported.

In December, the PMI came in at 59.7%, which marked a 1.5% jump from November’s reading (58.2%). Also increasing with the PMI was the new orders index, which rose to 69.4% from 64% the previous month. The production index also increased, rising to 65.8% from 63.9%, while the supplier deliveries index rose to 57.9%, the inventories index went up to 48.5% and the prices index hit 69%, rising from 65.5%. The last metric means prices for raw materials rose for the 22nd-straight month.

The employment index was the only metric to experience a decrease in December, falling 2.7% to 57%.

“Comments from the panel reflect expanding business conditions, with new orders and production leading gains, employment expanding at a slower rate, order backlogs expanding at a faster rate and export orders and imports continuing to grow in December,” said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee. “Supplier deliveries continued to slow (improving) at a faster rate, and inventories continued to contract at a slower rate during the period. Price increases continued at a faster rate. The customers’ inventories index declined and remains at low levels.”

Of the 18 manufacturing industries, 16 reported growth in December, including machinery, transportation equipment and electrical equipment. Two industries reported contraction during the period: wood products and textile mills.

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