Manufacturing in the U.S. grew in December at the fastest pace in six months, bolstered by gains in production and orders that show the industry remained at the forefront of the expansion entering 2012.
The Institute for Supply Management’s factory index climbed to 53.9 last month from 52.7 in November, the Tempe, Arizona- based group’s data showed today. Fifty is the dividing line between growth and contraction, and economists surveyed by Bloomberg News forecast the gauge would rise to 53.5.
Increasing demand for autos, gains in holiday sales and lean inventories may pave the way for further strength in the industry that accounts for about 12 percent of the economy. At the same time, faltering growth in Europe due to the debt crisis poses a risk to the U.S. expansion.
“This reinforces the upward trend we’ve been seeing in manufacturing data,” Eric Green, chief market economist at TD Securities Inc. in New York, said before the report. “Stronger domestic demand, decent export demand and better inventory demand” are fueling the industry, he said.
Orders and production increased at the fastest paces since April, today’s figures showed. Declines in inventories at manufacturers and at factory customers may point to further production gains in coming months.
Estimates for the manufacturing index from 74 economists ranged from 50 to 56. A reading above 42.5 generally indicates an expansion in the overall economy, the group has said.
Stocks extended gains after the report, with the Standard & Poor’s 500 Index climbing 2.1 percent to 1,283.99 at 10:11 a.m. in New York. The yield on the benchmark 10-year Treasury note jumped to 1.95 percent from 1.88 percent on Dec. 30.
