American manufacturing expanded at a strong pace in November as incoming business, production levels and employment indicate that the performance is likely to continue well into the New Year.
The factory index from the Institute for Supply Management eased to 58.2 from 58.7 in October but it retained its position well above the 50 division between expansion and contraction. Economists in the Reuters surey had forecast a score of 58.4.
The purchasing managers index in the manufacturing sector has averageed 57.4 so far this year and has jumped sharply since bottoming at 49.4 in August 2016. It reached an 13 year high in September at 60.8. Rising business investment, steady consumer spending and improving overseas economies have helped keep U.S. factories humming.
Production rose to 63.9 in November, the highest for this index since March 2011. The new orders index, a gauge of future business, climbed to 64.0 from 63.4 in October. Employment lost 0.1 to 59.7 but remained close to September's six year high of 60.3.
Inventories fell at the quickest pace this year, dropping to 47 from 48, indicating that purchases from produced stocks are beign depleted faster than being replaced, a positive indicator for upcoming production.
The export orders index was little changed, slipping to 56 in November from 56.5 the prior month.
In a separate report construction spending surged 1.4 percent in October, almost tripling the 0.5 percent median forecast, after gaining 0.3 percent in October.
The Commerce Department said that November's $1.24 trillion in construction expenditures was the most on record. Outlays for public construction projects rose 3.9 percent, the largest increase since 2014. State and local expenditures climbed 3.3 percent and Federal construction outlays soared 11.1 percent.
Constuction spending figures for August and September were revised higher which may affect the Bureau of Economic Analysis' last estimate for third quarter economic growth, currently 3.3 percent, when it is released later this month.
The Atlanta Fed raised its forecast for fourth quarter economic growth to 3.5 percent on Friday from 2.7 percent after the ISM and construction numbers.
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Manufacturing New Orders