United States: ISM manufacturing index strengthens in December
January 3, 2018
The Institute for Supply Management (ISM) manufacturing index increased to 59.7 in December, reversing two months of moderation following a 13-year high of 60.8 in September. December’s print came in above the 58.2 print recorded in November and comfortably surpassed market expectations of a small dip to 58.1. As a result, the index lies further above the 50-point threshold that separates expansion from contraction in the U.S. manufacturing sector.
Propelling the composite reading was a very robust increase in new orders, which jumped to a 14-year high of 69.4 in December from 64.0 in November. With the exception of employment and customers’ inventories, all other components of the manufacturing index also recorded improvements in December. Output growth was the fastest in more than seven years, with the index at 65.8 (November: 63.9), while the supplier deliveries index remained elevated at 57.9 in December (November: 56.5), down from September’s hurricane-related peak of 64.4. Regarding inflation, the prices index rose from 65.5 in November to 69.0 in December, which points to higher upward pressure on input prices from the previous month.
All things considered, the U.S. manufacturing sector ended the year on a strong note, returning to near-record levels of economic activity in December. Upbeat demand dynamics also point to sustained momentum into 2018, with many respondents expressing optimism about the near-term outlook for the sector, which will be compounded by the U.S. tax reform as it nears implementation.
Author: Almanas Stanapedis, Economist