US Economic Activity Continues to Show Signs of Improvement

New orders for manufactured goods rose for the second consecutive month in December, the US Department of Commerce reported on Friday.

In addition:


Shipments increased 0.7 percent up for the seventh consecutive month.


Unfilled orders increased 1.4 percent now up 20 of the last 21 months.


Inventories increased 0.1 percent up 26 of the last 27 months.

The latest report from the Institute for Supply Management also showed signs of improvement. According to the ISM Report On Business, economic activity in the non-manufacturing sector grew in January for the 25th consecutive month.

ISM's research found that the 12 non-manufacturing industries reporting growth in January were (in order): Real Estate, Rental & Leasing; Information; Educational Services; Transportation & Warehousing; Accommodation & Food Services; Construction; Other Services; Retail Trade; Professional, Scientific & Technical Services; Finance & Insurance; Health Care & Social Assistance; and Wholesale Trade.

By contrast, four industries reported contraction in January: Arts, Entertainment & Recreation; Mining; Utilities; and Public Administration.

ISM also reported that the nation's purchasing and supply executives who participated in the poll were mostly positive about business conditions, although there are still concerns about cost pressures and the sustainability of the recent spike in activity.

As one respondent in the scientific and technical services sector put it, "Economy continues to show signs of improvement and the company revenue is improving slightly, but is very susceptible to pricing and cost pressures."

In addition, I believe any optimism is tempered by concerns about continued economic uncertainty in the EU, where manufacturers are scaling back operations and investment.