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Home > Coronavirus > CHART OF THE DAY: U.S. factory growth remains robust

CHART OF THE DAY: U.S. factory growth remains robust

Jan. 4, 2021 by Jason Alexander

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The recovery in U.S. and global manufacturing activity continued through the end of 2020, even as new COVID-19 infections increased across the globe. U.S. manufacturing activity accelerated at its fastest pace in more than six years in December, according to the IHS Markit U.S. Manufacturing Purchasing Managers’ Index released on Monday.

The index posted a reading of 57.1 in December, up from 56.7 in November. The index is now at its highest level since September 2014 and is more than 21 points higher than the pandemic low of 36.1 reached in April. A reading above 50 suggests expansion.

The U.S. results were consistent with surveys of purchasing managers at factories across Asia and Europe that were released Monday as well. Those surveys recorded strong rises in activity during December.

The U.S. index advanced for the third straight month, with production growth accelerating at the second-strongest pace since March 2015, despite easing slightly from November’s recent high. New orders softened because of supplier delays and reduced capacity as additional coronavirus restrictions led to an increase in order cancellations.

Amid a significant deterioration in vendor performance, cost burdens and selling prices increased as firms sought to pass on higher input prices. Output expectations moderated slightly; however, as the post-election spike eased and virus cases surged once again, firms were strongly optimistic of a rise in output over the coming year.

Manufacturers are preparing for a dramatically different environment this year. Recent economic challenges have forced manufacturers to change their business models, virtually overnight, to stay competitive.

As we move through recovery and prepare for the vigorous growth economists are forecasting in the second half of the year, it will be important for manufacturers to maintain this newfound agility to quickly adapt, stay competitive and remain focused on existing and new customers.

For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.

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Filed Under: Coronavirus, Industrials Tagged With: coronavirus, Covid-19, IHS Markit Manufacturers Index, manufacturing

About Jason Alexander

@jaalex53

Jason assists clients in the industrial products, consumer products and financial services industries and has more than 15 years of experience serving large multinational clients with particular emphasis on SEC clients, Fortune 500 and middle market companies. Jason has previously advised clients in the areas of accounting, risk management, mergers and acquisitions, process design and improvement, internal audit, regulatory compliance, internal and external financial reporting and information technology system implementation. Strong record of accomplishment of people, team and practice development across North America, Europe, Latin America, Africa and Asia.

Jason is also on the Board of Directors of the RSM US Foundation and a member of RSM’s cutting edge Industry Eminence Program, which positions participants to understand, forecast and communicate economic, business and technology trends shaping the industries RSM serves.

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