US manufacturing ends 2012 at seven month high

US manufacturing data rose to a seven month high in December indicating a solid expansion of the sector, which many commentators are backing to power the economic recovery.

The final Markit US Manufacturing Purchasing Managers index was 54 in the last month of the year, down slightly on the 54.2 earlier flash estimate, but up from 52.8 in November and the highest since May.

Output, new orders and exports also expanded at a faster rate month-on-month although the input prices sub-index, at 61.9, remains elevated. Drilling down further into the numbers, one in five companies reported an increase in the new orders with the overall rate of growth the fastest since April, while new export orders rose for the second month running and at the strongest since March.

Employment in the manufacturing sector rose, with around 12% of firms hiring additional staff in December, the largest rise in job creation in eight months.

However, high input prices marred the picture with the rise in the price of steel in particular pointed out by many manufacturers.

Chris Williamson, chief economist at Markit, said: ‘The final Markit PMI came in slightly below the earlier flash estimate but still indicates that the US manufacturing sector enjoyed a reasonably strong end to the year. Production is growing at a solid pace, buoyed by rising domestic and export sales.

‘While economic growth may disappoint in the fourth quarter compared to the 3.1% rate of expansion seen in the third quarter, the recent run of positive PMI surveys towards the end of 2012 suggests that prospects have begun to look a little brighter for the new year.’