U.S. manufacturers buoyed by economy

Don Hogsett, January 19, 2004

Moving in lockstep with a sharply improving economy, American manufacturing activity improved for a sixth straight month in December, the nation's purchasing managers reported in a monthly canvass of more than 400 companies.

The December Purchasing Managers' Index compiled by the Institute of Supply Management (ISM) shot up by 3.4 percentage points to a reading of 66.2 percent, pointing to continued strong growth during the first quarter of 2004.

With the widely watched Purchasing managers' Index "growing at an accelerating rate, the manufacturing sector enjoyed its best month since December 1983," said Norbert J. Ore, chairman of the ISM's business survey committee.

Much of December's growth, said Ore, stemmed from a big surge in the New Orders Index, which climbed by 3.9 percentage points to a reading of 77.6 percent, its highest reported reading in more than half a century.

Gains were felt virtually across the board, during December, even in the Manufacturing Employment Index, which gained for a second straight month following 37 consecutive months of decline.

"Comments from purchasing and supply managers validate that a recovery is underway, and month-over-month improvement is significant to many respondents for the first time in three years," the purchasing managers reported. "Although some expressed concern over steep prices, many expect relief with the release of the steel tariffs."

With a rebound now clearly underway, Ore commented, "The month-over-month growth from November to December indicates a rapid recovery taking place in the sector, though there are still some businesses lagging and wondering when they will see the improvement that others are experiencing."

Of the 17 industries covered in the monthly canvass, 14 reported growth, including textiles.

December snapshot
Manufacturing benchmarks
Month-over-month percentage-point change

Source: Institute for Supply Management
Purchasing Managers' Index +3.4%
New Orders +3.9
Production +4.7
Employment +4.5
Inventories -2.7
Customers' Inventories -0.5
Prices Manufacturers Pay +2.0
Order Backlogs +2.0
Export Orders +2.5
Imports -4.6

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