US manufacturing expands for fifth month in December

04 January 2010 16:36  [Source: ICIS news]

WASHINGTON (ICIS news)--The US manufacturing sector expanded in December for the fifth consecutive month, the Institute for Supply Management (ISM) said on Monday, indicating that a recovery in the nation’s key production industries is gathering speed.

The institute said that its closely watched purchasing managers index (PMI) rose to 55.9 in December, the highest reading since April 2006 when the PMI was at 56.

A PMI reading of 50% or higher indicates that the manufacturing industry is expanding. A reading below 50% means that the sector is contracting.

The PMI has seen general improvement over the last 12 months, rising almost every month from the December 2008 low point of 32.9%. In August 2009 it rose above the 50% mark for the first time in a year.

The index is based on a survey of purchasing managers in 18 key manufacturing industries, including chemicals and plastics, with questions on their new orders, production, employment and other measures.

The US manufacturing industry is a crucial downstream consuming sector for a wide variety of chemicals and plastics.

Norbert Ore, chairman of the institute’s survey committee, said that the continuing gain in the purchasing managers index for December indicates that “overall, the recovery in manufacturing is continuing”.

That evaluation more or less matches other recent positive measures, including the Conference Board's index of leading economic indicators and recent improvements in consumer spending.

However, he noted that not all elements of the broad US manufacturing sector are experiencing the same rates of growth, and some are seeing dips in activity.

The institute reported that chemical products and plastics were two among seven manufacturing sectors that experienced little or no growth in December. However, chemicals production had seen gains in the November PMI report.

Among the nine manufacturing sectors reporting growth in December were several that are crucial downstream industrial consumers of chemicals, including apparel, computers, machinery production, electrical equipment, appliances, paper products, foods and beverages, furniture and transportation equipment.

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