Manufacturing activity hit its fastest pace in more two years in November, a sign that the sector could help boost economic growth heading into next year.
The Institute for Supply Management’s index increased to 57.3, better than expected and the best showing since April 2011, from 56.4 in October, according to the Monday report.
Any reading above 50 signals growth.
The ISM index has ticked up for six straight months, the longest run since the first 10 months of 2009, when the economy was starting to come out of the recession with manufacturers leading the way.
Improvements in the housing market are contributing to the economic expansion.
The manufacturing expansion was driven by increases in new orders, production and employment.
The index for new orders rose to 63.6 from 60.6, the fourth straight month with the sales exceeding 60, “indicating an extremely healthy pace of new orders,” said Chad Moutray, chief economist at the National Association of Manufacturers.
Export sales were up to 59.5 from 57.
The jump in new orders during the past few months has pushed up the production index to the highest point since February 2012 — to 62.8 from 60.8 in October.
“With manufactured goods exports only up marginally so far in 2013, the news of improved trade is a definite positive in this report,” Moutray said.
Hiring is picking up, too.
The employment index rose to 56.5 from 53.2, the highest level in 19 months.
The federal government will release jobs numbers for November on Friday, which should provide more insight into the health of the labor market after October’s figure came in better than expected at 204,000.
Right now, economists are forecasting that employers added 175,000 jobs last month and that the unemployment rate dropped to 7.2 percent from 7.3.
Even the comments show an overall brighter outlook for the sector.
A chemical products manufacturer said, “Outlook for the remainder of the year and into 2014 is trending positive.”
Other commenters said sales were stronger, reflecting the increase in demand.
“Yet, these comments also noted some concern for the U.S. fiscal situation and its impact on the business climate,” Moutray said.
One machinery manufacturer said: “Federal debt, deficit and inefficiency are causing a level of caution and uncertainty.”
Manufacturers and other business groups have expressed concern about the ability of Washington’s policymakers to provide greater certainty budget and debt issues.
“To the extent that there is caution in the marketplace, it is often attributed to the actions of government,” Moutray said.
“It will be important for policymakers to keep the momentum going by moving on from fiscal tensions and considering pro-growth measures that will allow the sector to flourish moving forward.”