WASHINGTON – U.S. manufacturing grew slightly last month, and factory hiring increased. The modest gain suggests that the economy entered the new year with some momentum.
The Institute for Supply Management, or ISM, a trade group of purchasing managers, said Wednesday that its index of manufacturing activity rose in December to 50.7. That’s up from a reading of 49.5 in November, which was the lowest reading since July 2009, a month after the recession ended.
A reading above 50 indicates growth; a figure below that signals contraction.
A measure of employment increased last month to 52.7. That’s up from 48.4 in November, which was the first time the employment gauge fell below 50 in three years.
Factories had cut jobs in three of the four months through November, according to government data. The jump in employment in the ISM survey suggests that manufacturers may have stepped up hiring last month.
The Labor Department will release the December jobs report Friday.
Still, a gauge of new orders was unchanged, and production grew more slowly, the survey found. Manufacturers also cut back on stockpiles, a sign of concern about future demand.
“The trend in manufacturing remains weak,” Jim O'Sullivan, an economist at High Frequency Economics, said in a note to clients.
The closely watched manufacturing survey was completed before Congress reached a deal to avoid the “fiscal cliff.”
The last-minute legislation passed Tuesday averts widespread tax increases and delays deep spending cuts that had threatened to push the country back into recession. Still, most Americans will see some increase in taxes this year, which will likely slow consumer spending.
For the first time in six months, a gauge of export orders rose above 50 for the first time in six months, according to ISM – a hopeful sign that overseas economies are improving, raising demand for U.S. goods.
A survey in China on Monday found that manufacturing activity there expanded for the third straight month.
Growth in the U.S. economy is being driven by other sectors such as housing. A government report showed that construction firms spent more on homebuilding in November. Overall construction spending slipped by 0.3 percent because of a sharp drop in federal projects. Spending on commercial buildings such as office buildings and shopping malls also fell.
There have been positive signs for factory output. In November, companies increased their orders for a category of large equipment that reflects their investment plans. That followed a big increase in October.
The economy grew at a 3.1 percent annual rate in the July-September quarter, much better than the 1.3 percent pace for the April-June quarter.