Manufacturing growth is accelerating into the end of the year, defying expectations that recent growth would slow, according to data from the Philadelphia Federal Reserve.
The Philly Fed’s Manufacturing Business Outlook Survey soared up to a reading of 26.2 in December, up from 22.7. Economists had been expecting a slight downtick to 21.8.
The survey measures factory conditions in the mid-Atlantic region. All readings above zero signal improvement. December’s big jump shows that conditions are not only improving, they are improving faster than expected.
“Indexes for general activity new orders and shipments were all positive this month and increased from their readings last month,” the Philly Fed said Thursday. “The firms also reported continued expansion of employment.”
Nearly 41 percent of manufacturing firms surveyed reported an increase in activity in December, up from 35 percent in November. The indexes for new orders and shipments also rose. The new order rise is particularly significant because it signals that the manufacturing expansion is likely to continue in the future.
Manufacturing employment continued to expand, albeit at a slightly slower pace. Manufacturing employment in the Philly Fed index turned positive in November 2016–the month Donald Trump was elected president–and has now expanded for 13 consecutive months. Companies remain optimistic about the expansion of employment over the next six months, with 42 percent saying they plan to add jobs over the period. The same share said they plan increased capital spending over the next sixth months.