Manufacturing sizzled in December, reaching an almost seven-year high, led by new orders and production, the Institute for Supply Management (Tempe, AZ) said today.
The group’s manufacturing index, known as the PMI, was 59.7%, up from 58.2% in November, according to a monthly report. It was the highest level for the index since February 2011.
“It’s a report full of pluses,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, told reporters on a conference call. “Generally, everything looked strong.”
ISM said 16 of 18 industries reported economic expansion in December. They included machinery, primary metals, petroleum and coal products, miscellaneous manufacturing, transportation equipment and fabricated metal products.
Only two industries, wood products and textiles, reported contraction last month.
The ISM report is based on a survey of 350 purchasing and supply executives. A reading above 50% indicates economic expansion and below 50% indicates contraction. The PMI averaged 57.6% in 2017 and has been above 50% for 16 consecutive months.
“These are strong numbers heading into 2018,” Bobby Bono, US industrial manufacturing leader for consulting firm PwC, said in a written statement about the ISM report. “We expect continued optimism over the coming months.”
New orders to manufacturers was the report’s major highlight, reaching an almost 14-year-high, ISM said.
The group’s New Orders Index came in at 69.4%, the highest since January 2004 when the index registered 70.6%. The December index was up from 64% in November.
Orders received in December will boost results for manufacturers in early 2018, Fiore said.
“We’re really teed up here for a strong first quarter,” he said. “We’re just continuing on the same trajectory, we’re growing.”
Fifteen out of 18 industries reported increases in orders, according to the report. Only one sector, wood products, reported a decline compared with November. The index has been above 50% for 16 consecutive months and above 60% for seven.
ISM’s Production Index increased to 65.8% from 63.9% in November. Thirteen industries reported gains in output. Only one industry, non-metallic mineral products, reported a decline in production.
The institute’s Employment Index fell to 57% in December from 59.7% the month before. That indicated that manufacturers were still adding jobs but at a slower rate. Eleven industries reported job gains, ISM said. Two industries, apparel and fabricated metal products, reported job cuts.