US Manufacturing Rose by Fastest Pace in 2 Years in December

American manufacturing expanded in December at the fastest pace in two years, reflecting firmer output and the biggest pickup in orders growth since August 2009.

The Institute for Supply Management said Tuesday that its index increased to 54.7, the fourth straight advance, from 53.2 a month earlier. The median forecast in a Bloomberg survey called for 53.8. Readings above 50 indicate growth. The ISM’s measure of orders surged 7.2 points, while its gauge of prices paid for materials climbed to the highest level since June 2011.

The jump in bookings, including the strongest pace of export orders since May 2014, will help keep factories on solid footing early this year as business confidence improves. Plant managers responded to the brighter outlook by adding to staff at the fastest pace since the middle of 2015, according to the ISM’s report.

Additional hiring and the pickup in inflation at the producer level help explain the Federal Reserve’s decision last month to raise interest rates.

The ISM’s index of prices paid climbed to 65.5 from a November reading of 54.5.

The group’s gauge of new orders increased to 60.2 last month after 53 in November. The measure of orders for overseas customers rose to 56 in December from 52.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza