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An employee welds pipe at Pioneer Pipe in Marietta, Ohio. The construction, maintenance and fabrication company employs around 800 people, supplying products to the oil and gas industry

Manufacturing in US Expands at Best Pace in Five Months

Dec. 1, 2016
Manufacturing production is at a two-year high, while data coming from the Department of Labor on Friday is expected to show that factory employment is down by 3,000.

Manufacturing expanded in November at the fastest pace in five months, indicating American producers are finding more relief in resilient domestic demand.

The Institute for Supply Management’s index increased to 53.2 from 51.9 a month earlier, the Tempe, Arizona-based group’s report showed Thursday. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 52.5.

The group’s production gauge climbed to an almost two-year high, propelling the overall measure higher for a third month as manufacturers continued to rebound from a late-summer swoon. The figures also showed factories waited longer for materials to be delivered, a sign of strengthening demand.

At the same time, while a recovery in business investment could help brighten prospects for producers, the industry may be held back by recent U.S. dollar appreciation that threatens to slow demand in export markets.

The ISM gauge of production increased to 56 in November, the highest since January 2015, from 54.6 a month earlier. An index of orders improved to 53 last month from 52.1, while a measure of export demand eased to 52 from 52.5.

The group’s index of supplier deliveries jumped to 55.7 last month from 52.2. That was the highest since December 2014 and shows stronger demand is delaying shipments.

ISM’s factory employment index fell to 52.3 from 52.9 the prior month, indicating a slower pace of job growth in the industry, Thursday’s report showed.

Employment figures due Friday from the Labor Department are projected to show payrolls increased by 180,000 in November, in line with the monthly average so far in 2016, according to the median estimate in a Bloomberg survey. The data are also forecast to show a drop of 3,000 in factory employment.

The ISM report also showed its index of prices paid held at 54.5 in November.

Federal Reserve policy makers have indicated a strong likelihood that they’ll raise their benchmark interest rate at this month’s meeting, marking the first increase in a year. The officials have observed strengthening in the labor market and signs of a sustained pickup in inflation.

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