U.S. manufacturing ends 2012 on a positive note, reveals report

January 2, 2013

U.S. manufacturers finished the year in an upbeat mood after increased demand from domestic and overseas markets in December saw the highest purchasing reading since May, a recently released report revealed.

According to Reuters, financial data released by Markit showed that manufacturing grew in the last month of the year, despite the well-publicized concerns regarding the potential fiscal cliff. The publication of its U.S. Manufacturing Purchasing Managers Index rose from 52.8 in November to 54.0 in December, the highest figure since May.

Any reading over 50 indicates that an industry sector is expanding, and with a number of high-profile deals announced in the last few weeks of 2012, U.S. manufacturers are looking forward to the New Year with renewed optimism. According to the report, one in five companies reported an increase in new orders, with economists believing that overseas demand and the success of lean enterprise principles also "bodes well for the year ahead."

"With recent indications that growth is also picking up in other key economies around the world, notably in emerging markets such as China and Brazil, and that the euro zone's economic crisis is easing, U.S. companies should benefit as stronger demand lifts exports in early 2013," said Chris Williamson, chief economist at Markit. "The pace of hiring hit an eight-month high, suggesting underlying improvement in demand pushed away worries about the 'fiscal cliff' to the backs of manufacturers' minds."

Although the gains seem to to be a modest reflection of the current strength of the industry, these figures are among a number of eagerly waited end-of-year reports. The December jobs report will be released by the Labor Department on January 4, while the Institute of Supply Management has indicated that its index of manufacturing activity has also shown a slight expansion to 50.7 from 49.5 in November.

The announcement by the Obama administration that the fiscal cliff has been put on hold for the moment will also be seen as good news for the industry, with manufacturers able to start putting more concrete plans in place for the financial year. The ISM report also showed that export orders had increased for the third straight month, with the housing market also seeing significant gains, a potential sign that the U.S. economy is making every effort to start 2013 with a positive outlook.