Manufacturing Growth Rises To Highest Level In Over Three Years

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Activity in the manufacturing sector expanded for the fifth consecutive month in December, according to a report released by the Institute for Supply Management on Monday, with growth coming in at its highest level in over three years.

The ISM said its index of activity in the manufacturing sector jumped to 55.9 in December from 53.6 in November, with a reading above 50 indicating growth in the sector. Economists had been expecting the index to increase to a reading of 54.3.

With the bigger than expected increase, the manufacturing index rose to its highest level since April of 2006, when it came in at 56.0.

An acceleration in the pace of new orders growth contributed to the improvement in the sector, with the new orders index rising to 65.5 in December from 60.3 in November. The increase lifted the index to its highest level since December of 2004.

Production also increased at a faster pace, as the production index edged up to 61.8 in December from 59.9 in November. Additionally, the employment index rose to 52.0 from 50.8 in the previous month, indicating a faster pace of employment growth.

Commenting on the data, Rob Carnell, chief international economist at ING, said, "The latest numbers are consistent with GDP growth of about 4%."

"This is probably a bit higher than we expect to see, but GDP figures over coming quarters in excess of 3% are a distinct possibility," he added.

The ISM report also showed that the inventories index rose to 43.4 in December from 41.3 in November, although it still indicated the 44th consecutive quarter of contraction.

On the inflation front, the prices index jumped to 61.5 in December from 55.0 in the previous month, pointing to an acceleration in the pace of price growth.

The ISM is due to release a separate report Wednesday morning regarding activity in the service sector in the month of December. The index of activity in the service sector is expected to rise to 50.5 in December from 48.7 in November, indicating a return to growth in the sector.

Activity in the manufacturing sector expanded for the fifth consecutive month in December, according to a report released by the Institute for Supply Management on Monday, with the index of activity in the sector rising to its highest level in over three years. The ISM said its index of activity in the manufacturing sector jumped to 55.9 in December from 53.6 in November, with a reading above 50 indicating growth in the sector. (Market News Provided by RTTNews)