There were a few important reports on the U.S. economy released this morning. First, the manufacturing purchasing managers' index (PMI) from IHS Markit ended December at 54.3, a 21-month high for the headline index. Under the hood, continued gains in new orders and production volumes contributed to the sharpest rise in job creation in more than a year, and inventories surged on greater client spending and upbeat business confidence. Surveyed managers attributed the uptick in activity to improving domestic economic conditions and greater willingness-to-spend among clients. Chris Williamson, chief business economist at IHS Markit, added that “The upturn is being driven almost entirely by rising demand from domestic customers, with exports stymied by the dollar’s recent surge.” However, input price inflation accelerated for the third time in the past four months during December, hinting at additional margin pressures for manufacturers. Similarly, the Institute for Supply Management (ISM) manufacturing index, also released this morning, jumped to 54.7 in December, better than expected and the highest reading in two years. Measures of new orders, production, exports, and employment all improved last month but inflation spiked. Comments from surveyed managers were generally positive.
Elsewhere, data from the U.S. Census Bureau showed that construction spending in America grew at an adjusted annual rate of $1.2 trillion in November (lagged release). That was an increase of 0.9 percent from October’s upward-revised print and better than the 0.6 percent gain economists had anticipated. November’s rise was the sixth monthly improvement in total construction spending in the past seven months, and enough to lift the annual rate of growth to 4.1 percent, the fastest recorded pace since April. Private-sector construction spending growth firmed in November, while the expansion in public-sector spending moderated.
Sources: Econoday, Bloomberg, ZH, IHS Markit, ISM, U.S. Census Bureau, FRBSLPost author: Charles Couch