Quote The U.S. factory sector posted one of its best months of the economic expansion in December as sales hit a 14-year high, the latest sign economic growth is picking up.

U.S. Factory Activity Gained Momentum in December

By Josh Mitchell

The Wall Street Journal

January 3, 2018

The U.S. factory sector posted one of its best months of the economic expansion in December as sales hit a 14-year high, the latest sign economic growth is picking up.

A key manufacturing index rose 1.5 percentage points from a month earlier to a reading of 59.7 in December, the second-highest level since early 2011, the Institute for Supply Management said Wednesday. A subindex of new orders—a measure of sales at factories—rose more than 5 points to 69.4, the highest since early 2004.

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Details hinted at further growth in coming months. While sales picked up, inventories—at both factories and their customers—fell. That combination suggests factories will have to boost production further in the first quarter of 2018 to satisfy demand.

Timothy Fiore, head of the ISM survey, pointed out the industry is also likely to see higher demand in 2018 due to a $1.5 trillion tax cut passed by Congress late last year. The tax-cut package is designed in part to prod U.S. businesses to spend on big-term projects, such as equipment and factories, in turn lifting demand for factory-made products.

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