The manufacturing sector that is central to the USA economy continued to expand at a strong pace in the final month of 2017, according to an industry survey released Wednesday. The New Orders Index registered 69.4, an increase of 5.4 percentage points from November while the Production Index registered 65.8, a 1.9 percentage point increase compared to the month before.
The Employment Index was 57 percent, a 2.7 percent decrease from November, but still indicative of growth in manufacturing jobs.
Two readings of the nation's manufacturing sector showed solid increases in December with one showing the strongest growth in almost three years while another report showed construction spending hit a record high. That's the fastest pace of new orders since January 2004.The employment index was one of the only weak spots, falling to 57 from 59.7.
ISM's semi-annual forecast released last month showed 65 per cent of firms surveyed had difficulty hiring new employees and 44 per cent increased starting pay to attract new workers.
What happened: Sixteen of the 18 industries tracked by ISM reported growth. Eight of the ten index components grew, while the inventories and customers' inventories indexes both contracted. The 2017 average was 57.6 and was made possible through strong domestic business investment and increased household spending, despite a dip in November following a number of devastating hurricanes.
A headline reading above 50 indicates that the manufacturing economy is generally expanding, below 50 indicates that it is generally contracting. Order backlogs have grown for 11 consecutive months. Heading into 2018, it will be interesting to see if these trends continue or if production levels can pace closer to new orders.
Of the 16 industries reporting growth in December, the machinery, chemical, and computer and electronic products sectors reported the biggest gains.