Manufacturing Activity Rises Fueled by Client Demand

U.S. manufacturing output rose in December as stronger client demand fueled more new orders and increased output.

The U.S. Manufacturing Purchasing Managers' Index, a survey by IHS Markit, rose to 55.1 for December compared to 53.9 the month before. The indicator ended the year signaling the strongest manufacturing growth since March 2015.

When the index is above 50, the sector is expanding. Below 50 means it is contracting.

"With business optimism about the year ahead running at its highest for two years in the closing months of 2017, companies are clearly expecting to be busier in 2018," IHS Markit Chief Business Economist Chris Williamson said.

Employment growth was also at a strong clip in December, growing at a pace not seen since September 2014, IHS Markit said.

As factory payroll numbers are on the rise, so are labor costs. The new year will bring higher minimum wages in 18 states and almost two dozen municipalities, continuing a recent trend of steady pay increases for the lowest-paid workers.

Mr. Williamson said increased demand for raw materials has caused supply chain delays, which in turn have raised input prices for manufacturers.

Write to Imani Moise at

(END) Dow Jones Newswires

January 02, 2018 10:57 ET (15:57 GMT)