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Tuesday, January 3, 2012

U.S. Manufacturing Improved in December

The ISM’s Manufacturing index rose from 52.7 to 53.9 in December, leaving the index at its highest level since June. The improvement leaves the index above its second-half average of 51.8.

The details in December were encouraging, as well, with new orders increasing from 56.7 to 57.6. This is the fourth increase in the past five months and the highest level since April for the index.


After rising briefly November, inventories continued to decline in December, with the inventory index falling from 48.3 to 47.1. The index has now fallen for three of the last four months and remains below its neutral threshold of 50 for the third month.

The difference between new orders and inventories, an indicator of future production, widened from 8.4 to 10.5 in December. This is the best level since March and indicates that factory output could continue to see gains in the beginning of the year. Employment also saw gains in December, rising from 51.8 to 59.9.

New export orders continued to climb, to 53.0, however, there remains potential for demand to drop as a result of Europe’s debt crisis.

This report shows that manufacturing continues to rebound, despite some headwinds from Europe. This is consistent with many other indicators, that show the U.S. economy recovering and has, so far, avoided contagion from Europe.

Read the report.

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