December US Factory Activity Up

Date: January 04, 2017

Factory Activity Rose To Highest Level In Two Years, Survey Finds


The latest Institute for Supply Management manufacturing index rose 1.5 percentage points to 54.7 in December, the highest level in two years and up from a reading of 53.2 in November. In addition, new orders rose 7.2 percentage points to 60.2 – its highest level since November 2014 – employment rose 0.8 percentage point to 53.1 – the highest since June 2015 – and production improved to 60.3. The AP reports that US factories “are steadily rebounding” and quotes Barclays economist Rob Martin saying the report “indicates that US manufacturing activity ended 2016 on a high note.” The ISM manufacturing index “has topped 50 for nine of the last 10 months,” the AP says, adding that the increase in new orders and production is “evidence of greater demand for factory goods.” Of the 18 industries tracked by the report, “11 reported growth in December, including machinery, primary metals and petroleum and coal products.” Reuters characterized the report as showing manufacturing “starting to perk up,” while Fox Business says the report is “a sign of stronger momentum in a key sector of the economy headed into the new year.” The Wall Street Journal says the ISM index increase beat expectations by analysts. Bradley Holcomb, who oversees the ISM survey, attributes the strong performance to a surge in consumer confidence following the presidential election.

What This Means For Small Businesses

Small business owners have been seeking indications that the overalls strength of the US economy is improving. Manufacturing in particular has been volatile since the recession, and the latest ISM data showing a rebound in manufacturing is a positive signal that there is some life in the economy as 2017 begins.

Additional Reading

Bloomberg News also covers the latest factory activity data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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