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IHS Markit Manufacturing PMI Rose in December

The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index (PMI) registered 55.1 in December, up from 53.9 in November. The latest index reading was the highest since March 2015 and signaled a solid improvement in the health of the sector. December data also rounded off the strongest quarterly performance since the start of 2015. Output at manufacturers expanded at a steep pace in December, with growth reaching an eleven-month high. Panelists attributed greater production to more favorable demand conditions and increased new order volumes.

Backlogs meanwhile increased at the quickest rate since October 2015 to indicate ongoing capacity pressures. Supply chain delays and increased global demand for inputs pushed costs up further, with the rate of cost inflation remaining sharp overall. Charge inflation, however, softened. Business confidence remained robust, driven by more favorable demand conditions. 


Mid-America Business Conditions Up in December

The December Creighton University Mid-America Business Conditions Index, an economic indicator for the nine-state region stretching from Arkansas to North Dakota, rose for the month, pointing to healthy growth for the next three to six months. The index, which ranges between 0 and 100, climbed to 59.0 from November’s 57.2. This is the 13th straight month that the index has remained above growth neutral, continuing to point to positive growth for the region over the next three to six months.

This month supply managers were asked to identify the greatest economic challenge facing their companies’ profitability over the next five years. Approximately 44.7% named increasing foreign competition as the biggest threat while more than one in five, or 21.3% indicated the shortage of qualified workers would be the greatest challenge to their businesses. 

G-7 Nations Expect Further Growth After Strong 2017

“The global economy found its post-crisis footing in 2017, with most major developing economies surprising on the upside,” Bloomberg reports.

“Comparing 2017 predictions made a year ago versus the likely outturn -- based on the latest forecasts in Bloomberg’s monthly survey -- shows that the pessimists called this one wrong. One of the biggest surprises was the euro area, set for its strongest expansion in a decade. At 2.3 percent, the expected growth is far above the 1.4 percent pace predicted at the start of the year.” 

Texas Manufacturing Activity Shows Robust Growth

Texas factory activity expanded strongly in December, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, spiked 18 points to 32.8, reaching its highest level in more than 11 years.

Other measures of manufacturing activity also pointed to more rapid growth in December. The new orders index jumped 10 points to 30.1, another 11-year high, and the growth rate of orders index moved up to 21.4. The capacity utilization index increased nine points to 26.3, and the shipments index rose from 16.7 to 21.5 this month. 

House, Senate Pass Tax Reform Legislation

After the U.S. House of Representatives passed the Tax Cuts and Jobs Act on Tuesday by a vote of 227-203, the Senate passed the bill early Wednesday morning by a vote of 51-48. The House will revote on a final version after some provisions were found to violate Senate rules. When finally signed into law, the bill would cut the corporate tax rate for the first time in 30 years.

“When this bill becomes law, manufacturers in America will be more competitive than they have been in decades,” said NAM president Jay Timmons. “Manufacturers do wish that some elements of the bill had been more pro-growth, and the NAM will continue working with Congress to improve on this foundation in the years to come. We reiterate our call for a triennial government study to see how our tax code compares to nations around the word--and determine what we can do to become even more competitive.” 

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