US construction, factory activity shine as year ended
WASHINGTON: US factory activity accelerated to a two-year high in December amid a surge in new orders and rapidly rising raw material prices, indicating that some of the drag on manufacturing from prolonged dollar strength and a slump in oil prices was fading.
Other data on Tuesday showed US construction spending hit a 10- -year high in November, providing a boost to a fourth-quarter economic growth estimate.
The reports suggested Presidentelect Donald Trump would inherit a strong economy, with a labour market that is near full employment, from the Obama administration.
“The economy is ending the year on a high note with even the manufacturing sector showing signs of faster growth.
It appears that President (Barack) Obama will be leaving his successor with a pretty good economy,” said Joel Naroff, Chief Economist at Naroff Economic Advisors in Holland, Pennsylvania.
The Institute for Supply Management (ISM) said its index of national factory activity rose 1.5 percentage points to 54.7 last month, the highest level since December 2014.
A reading above 50 indicates an expansion in manufacturing, which accounts for about 12 per cent of the US economy. A gauge of new orders jumped 7.2 percentage points to its highest level since November 2014.
Twelve industries, including petroleum, electrical equipment, appliances and components and machinery, reported growth in new orders last month.
Export orders also rose, but order backlogs were unchanged.
A measure of factory employment hit its highest since June 2015 and the production sub-index rose 4.3 percentage points.
Manufacturers reported paying more for raw materials, which suggests producer inflation could push higher in coming months.
The ISM’s prices index surged 11 percentage points to its highest level since 2011. It was the 10th straight month of increases in raw materials prices.