Defying a glum outlook by analysts, U.S. manufacturing strengthened in December, according to the Institute for Supply Management (ISM).
The ISM’s December index-tracking factory output rose from 57.5 in November to 60.7 in December. Economists had expected the pace to retreat to 56.6.
The survey’s price index surged from 65.4 to 77.6, the highest since May 2018, indicating that demand for materials is rising quickly, driving up prices, and hinting that inflation might be looming.
A sub-index of new orders edged up from 65.1 to 67.9 to and a gauge of suppliers’ deliveries jumped from 61.7 to 67.6, the latter indicating that manufacturers are optimistic their recovery from the economic crisis will continue.
As ISM official Timothy Fiore said in a comment quoted by the Financial Times, “Absenteeism, short-term shutdowns to sanitize facilities, and difficulties in returning and rehiring workers are causing strains that are limiting manufacturing growth potential.”
TREND FORECAST: We forecast there will be a sharp drop off in manufacturing in the first quarter of 2021 as nations impose strict lockdown rules that have shut down millions of businesses across the nation and around the world.
