ISM manufacturing PMI rises to 59.7 in December from 58.2

Chart illustrating Purchasing Managers Index growth

Chart illustrating Purchasing Managers Index growth

The manufacturing sector that is central to the United States economy continued to expand at a strong pace in the final month of 2017, according to an industry survey released Wednesday. December's reading indicates the sixteenth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion.

The new orders index increased to 69.4 in December from 64 the month before, marking the highest reading since January 2004, when the index came in at 70.6.

Fifteen out of 18 industries reported increases in orders, according to the report. 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.

"The upbeat mood is underscored by an increased appetite to hire new staff, with the survey indicating that factory payroll numbers are rising at a rate not seen for over three years".

A reading above 50 indicates expansion, while a reading below signals contraction.

The inventories index registered 48 points, up 1.5 points from the previous month. "The customers' inventories index declined and remains at low levels".

"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.

Meanwhile, prices for raw materials (up from 65.5 to 69.0) have remained highly elevated, with the measure up 3.5 percent from November's level. New orders tend to lead the other components, so this suggests that the headline index should rise above 60 over the next couple of months.

New orders to manufacturers was the report's major highlight, reaching an nearly 14-year-high, ISM said.

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