Economic Watch: Manufacturing, Employment Help Launch Strong 2017
The U.S. manufacturing industry kicked off the year with its strongest performance in two years, according to a new report, while a separate one about the sector plus others regarding employment, personal spending and incomes all points to increased economic growth.
The final U.S. Manufacturing Purchasing Managers’ Index for January, released Wednesday by financial information services provider IHS Markit, showed both output and new order growth accelerating since the end of last year.
Improving business conditions were also reflected in a sustained upturn in payroll numbers and the steepest rise in stocks of finished goods since the index began in 2007. Meanwhile, manufacturers reported that confidence regarding the year-ahead business outlook was the strongest since March 2016, which was mainly linked to hopes of a continued upturn in domestic economic conditions.
All this pushed the index to a reading of 55 in January, up from 54.3 in December and little changed from the preliminary January reading of 55.1. A reading above 50 indicates expansion while one below 50 signals contraction.
January data revealed a renewed acceleration in output growth among manufacturing firms, with the rate of expansion reaching its strongest for 22 months.
According to Chris Williamson, chief business economist at IHS Markit, despite exports being subdued by the strong dollar, order books are growing at the fastest pace for over two years on the back of improved domestic demand.
“With optimism about the year ahead at the highest since last March, the outlook has also brightened,” he said. “Production is consequently growing at the strongest rate for almost two years and inventories are rising at a rate not seen for nearly a decade as firms respond to higher demand, suggesting the goods-producing sector will make a decent contribution to first quarter GDP.”
Williamson cautioned that with input costs also rising at the steepest rate for over …Read the rest of this story
