US factory activity hit two-year high in December

On Tuesday, the Institute for Supply Management said its manufacturing index rose 1.5 percent to 54.7 in December, its highest level in two years. In addition, new orders rose 7.2 percent to 60.2, its highest level since November 2014. Employment rose .8 percent to 53.1, the highest since June 2015.

Many media outlets say the report indicates a good sign for manufacturing in the United States. NAM Chief Economist Chad Moutray says the increase mirrors “the jump in business confidence seen in other economic indicators since the election.” Moutray characterizes the gains in new orders and production as “very healthy” and “signifying strong expansions.” Meanwhile, he says, “inventories (unchanged at 49.0) contracted for the 18th consecutive month. With reduced stockpiles available, manufacturers will need to increase production to meet additional demand.” In addition, Moutray says a “significant” rise in input prices – up from 54.5 to 65.5 – “suggests that pricing pressures have begun to accelerate somewhat, as noted in the comments.”