Workers on an assembly line at Generac Power Systems, one of the largest U.S. makers of residential generators, in Whitewater, Wis.(Photo: Nam Y. Huh, AP)
WASHINGTON -- U.S. manufacturing grew slightly last month and
factory hiring increased. The modest gain suggests the economy entered
the new year with some momentum.
The Institute for Supply
Management said Wednesday that its index of manufacturing activity rose
in December to 50.7. That's up from a reading of 49.5 in the November,
which was the lowest reading since July 2009, one month after the
recession ended.
A reading above 50 indicates growth, while a reading below signals contraction. The ISM is a trade group of purchasing managers.
A
measure of employment increased last month to 52.7. That's up from 48.4
in November, which was the first time the employment gauge fell below
50 in three years.
Factories have cut jobs in three of the four
months through November, according to government data. The jump in
employment in the ISM survey suggests manufacturers may have stepped up
hiring last month.
The Labor Department releases the December jobs report on Friday.
Still,
a gauge of new orders was unchanged and production grew more slowly,
the survey found. Manufacturers also cut back on stockpiles, a sign of
concern about future demand.
"The trend in manufacturing remains weak," Jim O'Sullivan, an economist at High Frequency Economics, said in a note to clients.
The closely watched manufacturing survey was completed before Congress reached a deal to avoid the "fiscal cliff."
The
last-minute deal passed Tuesday averts widespread tax increases and
delays deep spending cuts that had threatened to push the country back
into recession. Still, most Americans will see some increase in taxes
this year, which will likely slow consumer spending.
A gauge of
export orders rose above 50 for the first time in six months, according
to the ISM survey. That's a hopeful sign that overseas economies are
improving, raising demand for U.S. goods.
A survey in China on
Monday found manufacturing activity in that country expanded for the
third straight month. That adds to evidence that its economy is
improving after a slowdown last year.
There have been some
positive signs for factory output in the U.S. In November, companies
substantially increased their orders for a category of large equipment
that reflects their investment plans. That followed a big increase in
the same category in October.
The economy grew at a 3.1% annual
rate in the July-September quarter, much better than the 1.3% pace in
the April-June quarter. But economists expect growth slowed in the final
three months of last year, partly because of the uncertainties
surrounding the fiscal cliff, to below a 2% pace.
Associated Press