There was some welcome economic news on Tuesday as the US manufacturing sector expanded in December at the fastest rate for 30 months.
The Institute for Supply Management (ISM) reported on Tuesday that its index of national factory activity jumped to a reading of 60.7 in December. Last month’s reading was the highest the index has been since August 2018. December’s reading jumped from the 57.5 recorded in November and far higher than the decline to 56.9 forecast by analysts.
Readings above 50 indicate expansion, whilst readings below 50 indicate an economy in contraction.
Strong Manufacturing Demand
Timothy Fiore, chair of ISM’s Manufacturing Business Survey Committee, said in the statement:
“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 (Covid-19) crisis ends.”
The demand for manufactured goods in the world’s largest economy has picked up after a fresh wave of new coronavirus cases has led to new business restrictions across the US, mostly impacting the huge services sector.
Today’s figures will be welcomed by analysts and economists as manufacturing accounts for 11.9% of the total US economy.
However, despite the strong demand, manufacturing output in the US is still about 3.8% below its pre-pandemic levels.
