WASHINGTON – Manufacturing unexpectedly accelerated in November at the fastest pace in more than two years, pointing to a pickup in business spending that will help propel the U.S. economy in early 2014.
The Institute for Supply Management’s index rose to 57.3, the highest since April 2011, from 56.4 a month earlier, the Tempe, Ariz.-based group’s report showed today. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 55.1. Measures of orders, production and employment strengthened.
Gains in home sales this year have led to more orders for home-related merchandise and construction equipment, benefiting companies such as Deere & Co. Further improvement in consumer demand and a rebound in business investment would provide an even bigger push for manufacturers.
“With the government shutdown over, with global growth picking up, we’ll see solid growth in manufacturing,” said Gus Faucher, senior economist at PNC Financial Services Group Inc. in Pittsburgh, whose firm projected an increase in the index to 56.7. “Demand generally is picking up - in Asia, in Europe - so that’s supporting manufacturing production in the United States.”
The ISM measure has increased six straight months, the longest such stretch since the first 10 months of 2009, when the economy was emerging from recession. The gauge has averaged 56.6 over the past three months, the strongest since May 2011.
For manufacturers, it’s been “certainly a different second half from the first half -- it’s meaningfully higher and stronger,” Bradley Holcomb, chairman of the supply management group’s factory committee, said on a conference call with reporters.
Stocks were little changed as investors assessed reports on holiday sales and the manufacturing data. The Standard & Poor’s 500 Index climbed less than 0.1 percent to 1,805.99 at 10:55 a.m. in New York.
Estimates for the factory index from 77 economists in the Bloomberg survey ranged from 53.5 to 57.5. Manufacturing accounts for about 12 percent of the economy. Of the 18 industries covered, 15 reported expansion in November, led by plastics, textiles and furniture, the ISM said.