Manufacturing business conditions in the U.S. improved solidly in December, despite the rate of growth having eased slightly over the month. This was signalled by the Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™), which is based on approximately 85% of usual monthly replies, posting 54.4, down marginally from 54.7 in November.
The PMI averaged 53.6 in the three months to December. This was up from an average reading of 53.2 in the three months to September and the highest since the first three months of the year.
Production at U.S. manufacturing firms continued to rise sharply in December, with the rate of growth remaining close to November’s 20-month peak. The strong increases in output were in contrast with only a marginal rise in October. Panellists generally attributed higher production to increased new orders.
A combination of greater client demand (reflecting improved economic conditions) and new product offerings were factors behind another increase in new orders at manufacturers. The rate of growth was solid and, although having eased over the month, in line with the average for the year.
Both the levels of new work from the domestic and international markets increased in December. In particular, new export orders rose for the third consecutive month – one of the longest sequences of growth in the past year-and-a-half.
Manufacturing employment in the U.S. rose for the sixth consecutive month in December. Moreover, the rate of job creation was solid and the fastest since March.
Input prices continued to rise in December, particularly for metals and electronics. Overall, the latest increase was strong and the fastest for a year. Firms partially passed on higher costs to clients by raising their selling prices. Notably, the latest increase in output charges was the strongest since August 2011.
The quantity of inputs bought by manufacturers rose at the strongest pace for 20 months in December, reflecting higher output requirements. Meanwhile, suppliers’ delivery times continued to lengthen and at a rate faster than the series average. A number of firms linked the latest increase in lead times for inputs to recent storms.