Manufacturing Numbers Point to a Stronger Year Ahead

Tax cuts, renewed consumer confidence, expansion in the manufacturing sector and even a rise in construction spending are all giving the economy a much needed New Year's boost.

If the momentum continues, analysts say steady hiring will likely follow putting more money into consumers' pockets and relieving some of their employment anxieties.

The latest sign came earlier in the week when the Institute for Supply Management release December figures showing the economy has expanded for the 17th straight month, with overall growth reported in the previous 20 months. The nation's supply executives reported in the latest Manufacturing ISM Report On Business that its index of manufacturing business activity rose to 57 last month -- a seven-month high. Any reading over 50 indicates growth, and that sits well above the December 2008 low of 32.5. We hit a post-recession high of 60.4 in April, the highest level since June 2004.

"The manufacturing sector continued its growth trend as indicated by this month's report. We saw significant recovery for much of the U.S. manufacturing sector in 2010," says Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee. "The recovery centered on strength in autos, metals, food, machinery, computers and electronics, while those industries tied primarily to housing continue to struggle. Additionally, manufacturers that export have benefitted from both global demand and the weaker dollar. December's strong readings in new orders and production, combined with positive comments from the panel, should create momentum as we go into the first quarter of 2011."

Among other positive indicators, builders began work on more homes and the government boosted its investment in construction projects to lift spending to $810.2 billion. A separate report Monday from the Commerce Department showed that construction spending rose in November for the third straight month.

Holiday spending was brisk this year compared to previous year, and the best it has been since 2006. Most Americans will also see their take-home pay increase in 2011 because of a cut in payroll taxes.

Manufacturers are also benefiting from stronger demand overseas, particularly in large developing countries. China, Brazil and India are among those nations recovering at a faster pace than developed regions, such as Europe and Japan.

A more comprehensive summary is available on the website of the: Institute for Supply Management.