ISM Manufacturing Index Up; Employment Expands

In December, the Institute for Supply Management's Manufacturing Index rose 3.5 points to 58.4. The increase put the index at a new cyclical high and was at a level not seen since 2003. This was the sixth consecutive month where the index was above 50, indicating manufacturing activity expansion. The recovery of manufacturing is continuing. The gain was lead by the production component which jumped 6.5 points to 66.2. New orders also came in strong at 65.9 indicating likely future expansions in output. Firms are also beginning to increase payrolls at a modest pace with the employment component improving 3.1 points to 53.3, which is a significant amount above the expansionary threshold. This suggests that payroll data may soon show employment gains in manufacturing.

>50 = expansion	Jan	Dec	Nov	Oct	Sep	Aug
Activity Index	58.4	54.9	53.7	55.2	52.4	52.8
Production	66.2	59.7	60.2	63.3	55.7	61.9
Employment	53.3	50.2	49.6	53.1	46.2	46.4
New Orders	65.9	64.8	61.5	58.5	60.8	64.9
New Export Orders	58.5	54.5	56	55.5	55	55.5
Backlogged Orders	56	50	52	53.5	53.5	52.5
Inventories	46.5	43	41.4	46.9	42.5	34.4