Executive Briefings

U.S. Factory Activity at 5-Month High, Bottlenecks Emerging

U.S. factory activity accelerated to a five-month high in November amid a pickup in new orders and production, suggesting that the manufacturing sector was regaining its footing after a prolonged slump.

A recent report from the Institute for Supply Management (ISM), which also showed some bottlenecks in the supply chain that could drive prices higher, was the latest indication that the economy continued to gain momentum in the fourth quarter.

The ISM said its index of national factory activity rose 1.3 percentage points to a reading of 53.2 last month, the best since June. A reading above 50 indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.

"The factory sector has started to show some building momentum," said Kevin Cummins, senior economist at RBS in Stamford, Connecticut.

Manufacturing is recovering as some of the drag from the dollar's past rally eases and oil prices continue to stabilize after last year's collapse. Gains in factory activity are, however, likely to be modest amid renewed dollar strength following the election of Donald Trump as the next president.

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A recent report from the Institute for Supply Management (ISM), which also showed some bottlenecks in the supply chain that could drive prices higher, was the latest indication that the economy continued to gain momentum in the fourth quarter.

The ISM said its index of national factory activity rose 1.3 percentage points to a reading of 53.2 last month, the best since June. A reading above 50 indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.

"The factory sector has started to show some building momentum," said Kevin Cummins, senior economist at RBS in Stamford, Connecticut.

Manufacturing is recovering as some of the drag from the dollar's past rally eases and oil prices continue to stabilize after last year's collapse. Gains in factory activity are, however, likely to be modest amid renewed dollar strength following the election of Donald Trump as the next president.

Read Full Article