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US manufacturing at seven-year high

10-02-2011
by 
in 

US manufacturing activity surged at a seven year high as inflation grew more than expected.

And employment in the US manufacturing sector rose for the four-month in a row, although there still remains unemployment concerns.

The ISM manufacturing index escalated to 60.8 showing good growth prospects.

"All in all, the ISM report showed the trend in manufacturing output growth (and hiring) rising solidly at the beginning of 2011," economists at UBS Investment Research said in a note to clients, adding the economy was gaining speed.

Similarly, the new orders component moved to 67.8 depicting good future growth prospects.

On the contrary, the prices paid component of the ISM index jumped to 81.5 from 72.5 in December.

"While the prices paid index suggests higher input costs, the overall impact on consumer price inflation monitored by the Federal Reserve will remain muted as wage growth, a key driver of service costs, has remained moderate," said John Silvia, chief economist at Wells Fargo Securities in Charlotte, North Carolina.

Corporate profits have risen as US manufacturing sector has been on the expansionary mode for the last 18 months.

Even small business sectors are showing signs of recovery. The most recent gross domestic product growth figures showed the US economy gathered speed in the fourth quarter to regain its pre-recession output peak with a big gain in consumer spending and strong exports.

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