Manufacturing Activity Jumps
The headline reading for the Institute for Supply Management (ISM) survey jumped to 54.7 in December from 49.2. The figure was much stronger than expected and was due to widespread strength that was notably more upbeat than the other related manufacturing surveys (NY Fed, Philly Fed, and Chicago PMI) released on the month.
While some of the unexpected strength may simply be some offset following three straight monthly readings below the 50% boom/bust line, it is encouraging that the overall index and the new orders figure both jumped to one of the highest levels of the year -- despite the heightened geopolitical risks in December. Of the 20 industries captured by the survey, 11 reported growth. Also worth noting is that the headline reading of 54.7 has historically corresponded to GDP growth at a solid 4.4%.
The data provide some upside risk for other manufacturing data that will be released later in the month (industrial production/durable orders) and bode well for the first quarter outlook as well.
As for the key components, new orders surged to 63.3 from 49.9, production rose to 55.6 from 54.6, and employment climbed to 47.4 from 43.8. On the price front, prices paid climbed to 56.9 from 55.7.
From MMS International