The beleaguered manufacturing sector posted one of its better performances of 2002 during December, according to figures released Thursday.
The Institute of Supply Management's index of U.S. manufacturing activity took a surprising jump in December. The 5.5-point hike to 54.7 in December comes after wallowing near 50 for four months.
Newport Communications Senior Economist Jim Haughey said similar survey indexes in the UK and Europe slipped slightly, to just below 50.
"The improvement here was for domestic reasons and the rapidly rising trade with Asia," he said. "Imports and exports both rose 2-3 points in December."
Haughey noted that production was up from 54.6 to 55.6, but said the surge in the overall index was almost entirely due to soaring orders -- up from 49.9 to 63.3, with the gain concentrated in packaged goods rather than capital goods.
He said readings at this level usually reflect a sharp, "catch-up" turn to higher activity and persist for only a few months.
Haughey also said the huge rise in orders may have been due to slim inventories at the beginning of the month after a pickup in consumer spending in October and November.
"Replenishing the supply chain may not be finished, since manufacturers reported a decline in consumer inventories from 46.5 to 43.0, while their own inventories remain lean with the inventory sub-index at 46.2. The return to normal operations in the West Coast ports probably contributed to the rise in orders as well," he said.
Haughey noted the best news in the report is that the employment index increased sharply from 43.7 to 47.4.
"This is probably consistent with a return to monthly manufacturing job losses of 10,000-15,000 from the recent level near 50,000. The supply managers who respond to this survey typically use the employment question to register their view of economic conditions. They have become much more optimistic," he said.
The Institute of Supply Management's index of U.S. manufacturing activity took a surprising jump in December. The 5.5-point hike to 54.7 in December comes after wallowing near 50 for four months.
Newport Communications Senior Economist Jim Haughey said similar survey indexes in the UK and Europe slipped slightly, to just below 50.
"The improvement here was for domestic reasons and the rapidly rising trade with Asia," he said. "Imports and exports both rose 2-3 points in December."
Haughey noted that production was up from 54.6 to 55.6, but said the surge in the overall index was almost entirely due to soaring orders -- up from 49.9 to 63.3, with the gain concentrated in packaged goods rather than capital goods.
He said readings at this level usually reflect a sharp, "catch-up" turn to higher activity and persist for only a few months.
Haughey also said the huge rise in orders may have been due to slim inventories at the beginning of the month after a pickup in consumer spending in October and November.
"Replenishing the supply chain may not be finished, since manufacturers reported a decline in consumer inventories from 46.5 to 43.0, while their own inventories remain lean with the inventory sub-index at 46.2. The return to normal operations in the West Coast ports probably contributed to the rise in orders as well," he said.
Haughey noted the best news in the report is that the employment index increased sharply from 43.7 to 47.4.
"This is probably consistent with a return to monthly manufacturing job losses of 10,000-15,000 from the recent level near 50,000. The supply managers who respond to this survey typically use the employment question to register their view of economic conditions. They have become much more optimistic," he said.
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