Factories
ber. Computer and electronic products manufacturers said they continued to have “tailwinds from the COVID-19 pandemic research support for vaccines and treatments.”
Makers of miscellaneous products reported that sales had exceeded pre-COVID-19 levels. Electrical equipment, appliances and components producers said business was stronger than expected, “with higher demand for many products.”
Despite strong demand, manufacturing output is still about 3.8% below its
pre- pandemic level, according to the Federal Reserve. That could persist for a while as the new wave of infections causes disruptions to labor and the supply chain.
Food manufacturers complained the virus was “affecting us more strongly now than back in March.” Similar sentiments were echoed by transportation equipment makers who said the outbreaks were constraining suppliers. Plastics and rubber products also reported that their suppliers were having difficulty finding and retaining labor.
Stocks on Wall Street were trading higher as investors focused on two runoff elections in Georgia on
Tuesday that will determine whether Republicans maintain control of the U.S. Senate. The dollar slipped against a basket of currencies. U. S. Treasury prices were lower.
The ISM report followed on the heels of data on Monday showing strong construction spending in November and October. Strength in these sectors supports economists’ predictions that the economy grew at around a 5% annualized rate in the fourth quarter after a record 33.4% pace in the third quarter.
The manufacturing boost to gross domestic product would come through an accumulation of inventory by businesses.
The virus and depleted government pa ndemic money took a bite out of consumer spending in November. More than $3 trillion in government pandemic relief fueled growth in the July-September quarter after the economy contracted at a historic 31.4% rate in the second quarter. Nearly $900 billion in fiscal stimulus was approved in late December.
The ISM’s forward-looking new orders sub-index rose to a reading of 67.9 last month from 65.1 in November. A measure of backlog orders hit a 2-1/2-year high.
Strong orders growth boosted manufacturing employment, which had contracted in November. The ISM’s manufacturing em
ployment gauge rebounded to 51.5 from a reading of 48.4 in November.
That could temper some economists’ expectations that the economy shed jobs in December. According to a Reuters survey of economists, the government’s closely watched employment report on Friday is likely to show that nonfarm payrolls increased by 100,000 jobs last month after rising by 245,000 in November.
But the supply chain gridlock is driving up costs for manufacturers. The survey’s prices paid index jumped to a reading of 77.6 last month, the highest since May 2018, from 65.4 in November. That raises the risk of higher inflation.