GROWTH IN MANUFACTURING
Production expands in December
Published: Saturday, January 3, 2004 at 6:01 a.m.
Last Modified: Saturday, January 3, 2004 at 12:59 a.m.
NEW YORK - The nation's manufacturing sector, thrashed by the recession and achingly slow to recover, finished 2003 with its most robust month of growth in two decades.
The Institute for Supply Management reported Friday that its manufacturing index jumped to 66.2 in December from 62.8 the previous month, strong evidence that the economic turnaround continues to pick up steam.
The new figure was the highest since December 1983 for a sector that has shed millions of jobs over the past three years. The reading, which marks the sixth consecutive month of expansion in manufacturing, was significantly higher than the 61 forecast by analysts.
An index reading above 50 indicates expansion; one below 50 indicates that manufacturing activity is contracting. From March through June, the manufacturing index was below 50.
Economists said the index shows that while the beleaguered factory sector still has much ground to make up, it is now firmly in recovery mode, helped along by low interest rates and a falling dollar that makes U.S.-produced goods cheaper overseas.
''Manufacturing is really the last piece of the puzzle that is falling in place to produce broad-based, sustained economic growth,'' said Sung Won Sohn, chief economist with Wells Fargo & Co. in Minneapolis. The momentum is particularly evident in new orders to factories, said Norbert J. Ore, chairman of the institute's manufacturing business survey committee. A component index tracking new orders reached its highest level since 1950, rising to 77.6 in December from 73.7 in November, he said.
''The strength in December's data provides significant encouragement for prospects in the first quarter of 2004,'' Ore said.
An index measuring factory production also rose, to 73 from 68.3 in November. ISM's measure of factory employment rose to 55.5 from 51.
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