Monday, January 4, 2010

Manufacturing Index Rises to Near 4 Year High

This is a great way to start out the new year - with GREAT Economic News!!

The story below is from MarketWatch, a great source of information concerning the health of our economy.

WASHINGTON (MarketWatch) -- The U.S. manufacturing sector expanded in December for the fifth straight month, the Institute for Supply Management reported Monday, further evidence that the recession is receding.

The ISM manufacturing index rose to 55.9% from 53.6% in November. It was the highest since April 2006.

Economists surveyed by MarketWatch were expecting a modest gain to 54.2%.

See our complete economic calendar and consensus forecast.

Readings over 50% indicate that more manufacturing firms said business was improving than said it was worsening.

"Overall, this was a very strong report, and it suggests that the recovery in the U.S. manufacturing sector is gaining further traction," wrote Millan Mulraine, an economist for TD Securities. "Given the fairly good historical performance of this indicator in tracking U.S. economic activity, the big improvement in the headline index is pointing to further pick-up in U.S. GDP."

In December, nine of 18 industrial sectors were growing, led by apparel, petroleum, electronics and machinery. ISM said. Manufacturing is benefiting from the need to restock inventories, said Norbert Ore, chairman of the ISM's survey committee. Read the full report.

"Overall, the recovery in manufacturing is continuing, but there are still some industries mired in the downturn as evidenced by the seven industries still in decline," Ore said. Construction materials, chemicals and plastics are declining.

"In spite of the solid performance in the ISM data this month, we believe the mixed signals emanating from the entire manufacturing sector suggests that the sector is vulnerable to a sharp slowdown in the first half of 2010," wrote Ken Kim, an economist for Stone & McCarthy Research.

The new orders index rose to 65.5% in December from 60.3% in November. It was the highest since December 2004.

The employment index rose to 52% from 50.8% in November. The production index rose to 61.8% from 59.9% in November. The supplier delivery index rose to 56.6% from 55.7%.

The prices paid index rose to 61.5% from 55% on higher prices for metals such as steel, aluminum and copper.

In a separate report, the Commerce Department said construction outlays fell 0.6% in November after a downwardly revised 0.5% decline in October. It was the seventh straight decline in construction spending. See full story.

Story written by Rex Nutting of MarketWatch

Click Here for a link to the complete article


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