U.S. Manufacturing Off To Strong Start

Two very strong reports to start 2014.

First the ISM via the WSJ:

The Institute for Supply Management’s monthly index, which is based on a survey of purchasing managers, hit 57 in December. That was down slightly from 2013’s high of 57.3, registered in November. Readings above 50 indicate expansion.

“I don’t see any weaknesses,” in the December survey, ISM Chairman Bradley J. Holcomb said Thursday. “I see a good, strong, balanced report…and a very promising start” for 2014. Readings for the first half of 2013 averaged 51.5, just over the expansion threshold. In the second half, that pace picked up to 56.3.

And Markit’s PMI report:

Business conditions in the U.S. manufacturing sector improved at the fastest rate since January, according to the final December Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™). At 55.0, up from 54.7 in November and above the earlier flash estimate of 54.4, the PMI indicated a solid rate of expansion.


The PMI averaged 53.8 in the three months to December and, above the average for the three months to September of 53.2, was the highest since the first three months of the year.

Production in the manufacturing sector continued to rise strongly in December. The rate of growth was well above the series average and the fastest since March 2012. All three market groups (consumer, intermediate and investment) posted higher levels of output in December, with manufacturers of investment goods posting the fastest rate of increase.

The increase in output was largely in response to higher new orders, which itself reflected greater client demand. Total new business rose at a strong pace that was little-changed from November’s ten-month peak. Moreover, new export orders continued to increase, as has been the case in five out of the past six months. Although producers of consumer goods reported a strong increase in total new work in December, exports were broadly unchanged for the second month running.


Manufacturing employment in the U.S. continued to increase in December, taking the current sequence of job creation to six months. The rate of growth was solid and the fastest since March. Panellists often commented on an improved business outlook.

Meanwhile, input costs faced by manufacturers rose at the fastest pace for almost a year in December. Panellists commonly reported higher raw material prices, particularly for metals and wood. Larger costs were partially passed on to clients, with firms raising their selling prices for the sixteenth consecutive month. On average, the latest rise in output charges was the strongest for almost two-and-a-half years.

Large manufacturers (more than 500 employees) reported a marked rise in output during December. This generally reflected a sharp increase in new business, with the rate of new order growth the joint-fastest since late-2009. In contrast, new order growth was only modest at small manufacturers (less than 100 employees), with new export work having fallen since November.



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