U.S. Manufacturing Activity Expands at Fastest Level in More Than Two Years -- ISM

By Xavier Fontdegloria

The U.S. manufacturing sector's activity expanded in December at the quickest rate since August 2018, data from a survey compiled by the Institute for Supply Management showed Tuesday.

The ISM Manufacturing Report on Business PMI for December was 60.7, up from 57.5 in November. The reading beat expectations from economists polled by The Wall Street Journal, who predicted the PMI to decline slightly to 57.0.

The indicator signals the manufacturing economy continued its recovery in December, ISM said, with four of five subindexes in strong growth territory.

"Manufacturing performed well for the seventh straight month, with demand, consumption and inputs registering strong growth compared to November. Labor market difficulties at panelists' companies and their suppliers will continue to restrict the manufacturing economy expansion until the coronavirus crisis ends," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.

ISM compiles the PMI from a survey of manufacturing supply executives whose responses reflect the change in the current month compared with the previous one in certain areas of business activity. A PMI reading above 50 indicates that the manufacturing economy is generally expanding, while below 50 indicates that it is generally declining. December marks the seventh consecutive month of gains for the index.

The production index registered 64.8 points, an increase of four points compared with the November reading of 60.8. New orders climbed to 67.9, up 2.8 points from 65.1 the previous month.

The employment index returned to expansion territory at 51.5 points, 3.1 points higher from the November reading of 48.4.

The inventories index rose slightly to 51.6, while the prices index increased more than 12 points to 77.6.

All six of the biggest industry sectors expanded compared with the previous month, the report said. And of the 18 manufacturing industries, 16 reported growth in December.

December manufacturing PMI also signaled that the U.S. overall economic activity is rebuilding, as a reading above 42.8 over a period of time generally indicates an expansion of the overall economy. This is the eighth consecutive month in which the PMI indicates such expansion.

Write to Xavier Fontdegloria at [e-mail]

Corrections & Amplifications

This item was corrected at 11:48 a.m. ET to show that the ISM Manufacturing Report on Business PMI for December beat expectations from economists polled by The Wall Street Journal. An earlier version incorrectly said that the PMI missed expectations.

(END) Dow Jones Newswires

01-05-21 1037ET