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That Bubbling Sound Coming From U.S. Factories May Be Inflation

  • ISM factory gauge advances to a two-year high in December
  • Price gauge surges though still below higher-inflation periods
A forklift driver moves materials used for making countertops at a manufacturing facility in Brooklyn New York,.
Photographer: David Williams/Bloomberg

Champagne wasn’t the only thing bubbling at the start of 2017 for U.S. manufacturers: So was inflation, a potential warning sign in an otherwise broadly positive report on American factories.

The Institute for Supply Management said Tuesday that its index of manufacturing increased for a fourth straight month, reaching a two-year high of 54.7 as new orders surged by the most since the summer of 2009 on stronger overseas and domestic demand. Percolating sales were evident in the group’s gauge of prices paid for raw materials, which advanced to 65.5, the highest level since June 2011.