ISM manufacturing PMI rises to 59.7 in December from 58.2

Galtero Lara
Enero 13, 2018

USA factory activity rose more than expected in last December, the latest sign of strong US economic momentum, the data released by The Institute for Supply Management (ISM) revealed on Wednesday.

In December, the PMI came in at 59.7%, which marked a 1.5% jump from November's reading (58.2%). Of the eighteen manufacturing industries, sixteen reported growth, while two reported contraction. "The customers' inventories index declined and remains at low levels". The production index also climbed to 65.8 in December from 63.9 in November, indicating a decent acceleration in the pace of growth.

ISM said 16 of 18 industries reported economic expansion in December.

In December, the gauge of new orders increased to 69.4, the highest in almost 14 years. In general, the labor market has tightened considerably, with the employment index averaging 59.3 over the past five months, up from a more modest 52.8 one year ago.

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Export orders grew 2.5 points to 58.5, indicating growth for the twenty-second consecutive month.

The inventories index registered 48 points, up 1.5 points from the previous month. In responding to ISM's survey, 65 percent stated that they had difficulty hiring new employees and 44 percent increased starting pay in an effort to attract new workers. That indicated that manufacturers were still adding jobs but at a slower rate. The last metric means prices for raw materials rose for the 22nd-straight month. The index has been above 50% for 16 consecutive months and above 60% for seven.

Andrew Hunter, US economist at Capital Economics, said the rebound in the ISM manufacturing index leaves it close to a 13-year high and at a level that historically has been consistent with GDP growth accelerating to more than 4% in annual terms. The headline number in the latest survey was boosted by healthy gains in new orders (up from 64.0 to 69.4), as noted above.

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