December 2017 Institute for Supply Management

America’s economic expansion showed no signs of fatigue in December 2017 according to data from the Institute for Supply Management.  Both sides of the economy maintained readings well above the breakeven level of 50.0.  The cyclically sensitive manufacturing segment accelerated to a reading of 59.7 (a 14-year high) from the already impressive tally of 58.2 in November.  Services, the largest portion of the economy, gave back some versus a month earlier but still managed to come in at 55.9, a healthy figure.

Manufacturing’s strong reading was led by its forward-looking components, but there was strength throughout the details.  New orders remained above 60 for the 7^th straight month and nearly breached 70 at 69.4.  New export orders rose 2.5 points to 58.5, suggesting a global acceleration could be occurring.  Production surged to 65.8, boding well for the 4^th quarter gross domestic product (GDP) report.  Employment softened a bit, corroborating December’s employment report.

Nonmanufacturing cooled some but still points to further economic expansion.  Business activity fell to 57.3 from 61.4; November’s tally was not expected to hold since tallies above 60 in this portion of the report are infrequent and short-lived.  New orders were also down some, but the 54.3 reading indicates additional output is on the horizon. 

Any way you slice it, America’s economy is moving forward.  Both sides of output looked strong in December.  There was enough strength in the leading portions of the two indicators that it is safe to say the expansion’s finale is not on the immediate horizon.  Last year ended well according to ISM data, next month we’ll get to see whether or not the early part of this year is continuing the trend.