Economic Watch: Manufacturing, Construction Post Impressive Gains
In another sign the U.S. economy is gathering more steam, two reports released Thursday morning showed a strong rebound in the nation’s manufacturing sector while another indicated construction remains strong following earlier positive indicators.
The survey of purchasing managers by the Institute for Supply Management showed economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 90th consecutive month, according to the industry group’s Purchasing Managers’ Index.
The November PMI registered 53.2%, an increase of 1.3 percentage points from the October reading of 51.9%. A reading above 50% indicates expansion in the manufacturing sector while a reading below 50% indicates contraction.
This is not only the best reading in five months and the third straight monthly hike, but it also beat a consensus estimate from Wall Street analysts. Late last year and early into this year, manufacturing slumped to where the sector was contracting for the first time in the economic recovery since the Great Recession.
The New Orders Index for November registered 53%, an increase of 0.9 of a percentage point from the October reading of 52.1 while the Production Index registered 56%, 1.4 percentage points higher than the October reading of 54.6 percent. Of the 18 manufacturing industries, 11 reported growth in November.
“The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (51.2%) corresponds to a 2.5% increase in real gross domestic product (GDP) on an annualized basis,” said Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee. “In addition, if the PMI for November (53.2%) is annualized, it corresponds to a 3.2% increase in real GDP annually.”
Meantime, a similar report from financial information services provider IHS Markit showed manufacturing last month had the strongest growth rate for new orders since March 2015.
At 54.1 in …Read the rest of this story
