Last updateTue, 26 Jan 2021 8pm

U.S. Manufacturing PMI Grew at Robust Pace in January

Manufacturing firms signaled the sharpest improvement in operating conditions on record in January, as highlighted by the IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) posting 59.1, up from 57.1 in December. Alongside stronger expansions in output and new orders, the headline figure was driven up by another substantial deterioration in vendor performance. January data signaled a robust upturn in manufacturing production that was the steepest since August 2014, as new orders rose markedly. Stronger demand from new and existing customers was reportedly behind the expansion, with some clients reportedly committing to orders previously placed on hold. New export orders also rose at the quickest rate since September 2014.

U.S. Industrial Production Up in December

Industrial production advanced 1.6% in December, with gains of 0.9% for manufacturing, 1.6% for mining, and 6.2% for utilities. The increase for utilities resulted from a rebound in demand for heating after unseasonably warm weather in November. For the fourth quarter as a whole, total industrial production rose at an annual rate of 8.4%.

Manufacturing output advanced 0.9% in December for its eighth consecutive monthly gain. For the fourth quarter, manufacturing production rose at an annual rate of 11.2%. The production of durable goods other than motor vehicles and parts rose 1.5%.

Global Manufacturing Growth Stays Close to Decade Highs

The J.P. Morgan Global Manufacturing PMI was unchanged from November's 33-month high of 53.8. The headline PMI has remained above the neutral 50.0 mark for six successive months.

The end of 2020 saw rates of growth in global manufacturing production and new orders remain among the strongest seen over the past decade, as the sector continued to recover from the COVID-19 related downturn earlier in the year. However, world supply chains stayed severely stretched, leading to marked delays and disruption to raw material deliveries, production schedules and distribution timetables.

World Bank: Global Economy to Expand by 4% in 2021

The global economy is expected to expand 4% in 2021, assuming an initial COVID-19 vaccine rollout becomes widespread throughout the year. A recovery, however, will likely be subdued, unless policy makers move decisively to tame the pandemic and implement investment-enhancing reforms, the World Bank says in its January 2021 Global Economic Prospects.

Although the global economy is growing again after a 4.3% contraction in 2020, the pandemic has caused a heavy toll of deaths and illness, plunged millions into poverty, and may depress economic activity and incomes for a prolonged period. Top near-term policy priorities are controlling the spread of COVID-19 and ensuring rapid and widespread vaccine deployment. To support economic recovery, authorities also need to facilitate a re-investment cycle aimed at sustainable growth that is less dependent on government debt.

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