U.S. manufacturers record strong end- 2016, business conditions rebound at fastest pace in December

U.S. manufacturers have recorded a solid end to this year, with business conditions rebounding at the most rapid pace since March 2015. The seasonally adjusted Markit Flash U.S. Manufacturing PMI rose slightly to 54.2 in December from 54.1 in November, continuing its rebound from the post-crisis low seen in May.

The headline figure has hinted at a strong rebound in manufacturing sector business conditions, with a more rapid job creation and stock building countering slight moderations in output and new order growth since November. Furthermore, the latest increase in preproduction inventories was the most rapid recorded since the survey started in May 2007. Manufacturers have registered that greater stock accumulation showed stronger optimism towards the demand outlook, along with faster than anticipated new order growth in recent months, said Markit.

Manufacturing output grew for the seventh straight month in December, thus hinting at a sustained recovery from t he weak patch witnessed in the second quarter of 2016. However, the pace of production growth moderated from October’s 20-month peak. Survey respondents recorded that greater sales and attempts to replenish inventories had resulted in rising production volumes in December.

The data for December has revealed an additional strong upturn in new work received by manufacturers, with the rate of expansion holding close to the 20-month high witnessed in November. This was linked to rebounding domestic demand conditions. In the meantime, export sales were close to stagnation, which was in contrast to the modest growth witnessed on average in the second half of 2016.

Rebounding business conditions resulted in increased hiring of staff throughout the manufacturing sector in December. The pace of job creation was the steepest for a year-and-a-half, which assisted in easing pressures on operating capacity. Therefore the latest increase in backlogs of work was just marginal and the smallest for three months, noted Markit.

Increased purchasing activity continued in December, marking eight months of sustained growth. The latest upturn in input purchasing was attributed to risen production schedules and attempts to stimulate inventories as underlined by the survey record rise in stocks of purchases. In spite of strong demand for inputs, the latest data hinted that suppliers’ delivery times were widely unchanged since the previous month.