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Manufacturing in U.S. sees strong year-end, unemployment claims down

Staff Writer |
U.S. manufacturers reported a strong end to 2016, with business conditions improving at the fastest pace since March 2015.

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At 54.2 in December, up fractionally from 54.1 in November, the seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) continued its recovery from the post-crisis low seen in May (50.7).

The headline PMI signalled a robust improvement in manufacturing sector business conditions, with faster job creation and stock building offsetting slight moderations in output and new order growth since November. Moreover, the latest rise in preproduction inventories was the strongest recorded since the survey began in May 2007.

Manufacturers noted that greater stock accumulation reflected stronger optimism towards the demand outlook, alongside faster-than-expected new order growth in recent months.

Manufacturing output expanded for the seventh consecutive month in December, thereby signalling a sustained rebound from the soft patch seen in the second quarter of 2016.

The rate of production growth nonetheless eased from October’s 20-month peak. Survey respondents noted that greater sales and efforts to replenish inventories had driven up production volumes at the end of 2016. Reflecting this, stocks of finished goods rose for the third month running, and at the most marked pace since March 2015.

December data revealed a further robust upturn in new work received by manufacturers, with the pace of expansion holding close to the 20-month high seen in November. This was overwhelmingly attributed to improving domestic demand conditions.

Meanwhile, export sales were close to stagnation, which contrasted with the modest growth seen on average in the second half of 2016. Improving business conditions led to increased staff hiring across the manufacturing sector in December.

The rate of job creation was the steepest for a year-and-a-half, which helped to alleviate pressures on operating capacity. As a result, the latest rise in backlogs of work was only marginal and the smallest for three months.

Initial weekly unemployment claims in the U.S. for the week ending on December 10 dipped by 4,000 to reach 254,000, according to the Department of Labor. The four-week moving average fell by 5,250 to 257,750.

The prior week's estimate for initial unemployment claims was unrevised.

Secondary claims, those which are not filed for the first time and referencing the week ending on 3 December, increased by 11,000 to hit 2.018m.

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