Manufacturing back in growth mode

Tempe, Ariz. -- U.S. manufacturing activity improved during December, as the Purchasing managers' Index compiled by the Institute for Supply Management (ISM), jumped up by 1.9 percentage points to a reading to 51.4, rebounding from a weak 49.5 in November.

A reading of more than 50 indicates growth in this key sector of the U.S. economy, while anything beneath 50 signals contraction. In November, the manufacturing sector had suffered a major setback, actually slowing down for the first time in more than a year.

"Manufacturing proved resilient in December," said ISM’s Norbert Ore. New orders increased by 3.4 percentage points, jumping up to a level of 52.1 from 48.7 the preceding month. Keeping pace with demand, production levels surged by 3.3 percentage points to a level of 51.8, climbing back above the break-even mark.

Employment ticked up modestly, by half a percentage point, to a reading of 49.7, but still hovered beneath the line that separates contraction from growth.

In a solid piece of good news, the index measuring the price of supplies and raw materials plunged by 6.0 percentage points to a level of 47.5 in December from 53.5 in November, signaling that prices actually declined. "The Prices Index is trending downward, relieving some of the inflationary pressure that has troubled manufacturing since the middle of 2003," said Ore.

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