The Institute for Supply Management (ISM) reported this morning that its manufacturing survey rose to 50.7% in December, up 1.2% from November’s reading of 49.5%. The rise is only the third in the past seven months. A reading above 50% indicates that the manufacturing economy is expanding. The consensus estimate for the manufacturing index was 50.5%.

The new orders index was unchanged from November, at 50.3%. The production index fell from 53.7% to 52.6%, the third straight month of expansion.

The employment index rose to 52.7% in December, up 4.3% from November, marking the return to a streak of growth that began in September 2009 and that was interrupted by a decline in November.

The new orders for export index was rose to 51.5%, returning to expansion mode following a six-month period of contraction.

Among comments from manufacturers, ISM noted these:

• Many Chinese sources are coming to us with cost reductions to maintain their current business volumes. (Machinery)
• Black Friday was good, but forward economic visibility is foggy. (Computer & Electronic Products)
• Business conditions have flattened out since last month. Overall production has leveled off from their previous reduction last month. (Transportation Equipment)
• We are seeing stabilization of orders and costs as well as production capacity for the first time in months. (Miscellaneous Manufacturing)

The ISM report is available here.

Paul Ausick

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