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December PMI signals strongest manufacturing growth in U.S. since March 2015

Staff Writer |
December data indicated a marked improvement in US manufacturing operating conditions.

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The latest upturn was supported by faster increases in output and new orders, amid reports of greater client demand.

In line with stronger production growth, employment rose further and at the fastest pace since September 2014.

Backlogs meanwhile increased at the quickest rate since October 2015 to indicate ongoing capacity pressures.

Supply chain delays and increased global demand for inputs pushed costs up further, with the rate of cost inflation remaining sharp overall.

Charge inflation, however, softened.

Business confidence remained robust, driven by more favourable demand conditions.

The seasonally adjusted IHS Markit final US Manufacturing Purchasing Managers’ Index (PMI) registered 55.1 in December, up from 53.9 in November.

The latest index reading was the highest since March 2015 and signalled a solid improvement in the health of the sector.

December data also rounded off the strongest quarterly performance since the start of 2015.

Output at manufacturers expanded at a steep pace in December, with growth reaching an eleven-month high.

Panellists attributed greater production to more favourable demand conditions and increased new order volumes.

New business received by manufacturers continued to rise in December, with the rate of expansion accelerating to a ten-month high.

Anecdotal evidence linked increases to greater demand from new and existing clients.

Exports sales, however, grew at a marginal pace.

In line with greater production requirements, firms added to their payrolls and at the fastest rate since September 2014.

Increased capacity pressures were also reflected in backlog accumulation.

The upturn in outstanding business accelerated and was the quickest since October 2015.

Meanwhile, input price pressures intensified with the rate of cost inflation accelerating for the second consecutive month.

Furthermore, the marked rate of increase was the second-fastest since December 2013.

Panellists linked rises to higher raw material prices, which partly stemmed from supplier delays.

Meanwhile, factory gate charges rose solidly, despite the rate of inflation softening since November. â–