United States manufacturing expanded in December at the fastest rate of the last three months, ending the best year for manufacturing since 2004, according to a report by the Institute for Supply Management.
Although some companies reported difficulty in finding highly-skilled labor, the U.S. manufacturing sector recorded its best numbers in over a decade. According to a report from Bloomberg News, 16 of the 18 manufacturing industries reported growth in December, notably machinery and computer and electronic products.
The report suggests that December’s strong manufacturing numbers will carry over into 2018.
Bloomberg economists Carl Riccadonna and Yelena Shulyatyeva argue that the December numbers are a reflection of the manufacturing dip that took place in November:
Bloomberg Economics’ assessment that the dip in the November ISM headline was a headfake proved accurate. This was due to the alleviation of bottlenecks following the hurricanes, whereby supplier deliveries weighed on the headline. The December results showed a payback for this effect. However, it was not just that, as enthusiasm for the tax reform bill’s passage bolstered business confidence. This may not be the end of the ISM’s climb, as both new orders and production posted further gains in the month. Business sentiment has been high enough for long enough that it is actually starting to drive the “hard data” in a positive direction.
The December figures from the report were recorded prior to President Trump’s signing of the tax reform bill, which provides firms with even more incentive to invest.