A U.S. worker assembles Ford vehicles at an assembly plant in Chicago, Illinois, June 24, 2019.
The Institute for Supplier Management (ISM) on Tuesday (Jan. 5) reported a surprise rebound in its manufacturing purchasing managers’ index (PMI) to 60.7 in December last year, a two-year high growth rate that far exceeded market expectations of 56.7 and was also a significant increase from 57.5 back in November. The association said U.S. manufacturing activity has been in growth for eight consecutive months.
The Associated Press reported that last December’s PMI index rose to 60.7, the highest level since August 2018; when a record 60.8 was recorded, according to the report. Last December’s index also rose 3.2 percentage points from November’s 57.5.
The PMI index is a measure of manufacturing activity and a leading indicator for economic monitoring, and once the PMI is above the 50 rung mark, it means that the economy is showing expansion. In general, if the PMI shows a homogeneous change for more than three consecutive months, it reflects the trend change of economic operation and shows that the manufacturing industry is steadily recovering. The U.S. PMI index has been above the Rongwu line of 50 for eight consecutive months.
The United States from April to June last year during the most severe economic contraction in more than seven decades, including restaurants, bars and tourism, including the service sector have been hit by a big impact, but the manufacturing sector has instead been growing solidly since then.
General Motors Corp. reported Tuesday that its sales jumped 5 percent in the final quarter of 2020, its best performance since 2007, with deliveries up 12 percent. The company’s sales to individual buyers began to recover in May and reached pre-epidemic levels in the fourth quarter.
Meanwhile, Toyota, which has plants in Georgetown, Kentucky (Georgetown), Blue Springs, Missouri (Blue Springs) and San Antonio, Texas (San Antonio), said their sales jumped 20 percent last December.
Although the manufacturing industry has recovered since last spring, but the ISM manufacturing committee chairman Timothy Fiore (Timothy Fiore) said that the manufacturing industry is still facing resistance related to the virus, such as plant shutdowns need to sterilize facilities and difficulty in hiring new workers because of the virus again surging in the United States.
Gary Johnson, Ford’s chief manufacturing officer, said they used temporary workers as backup capacity during the outbreak, allowing the plant to maintain about 98 percent of its capacity after deducting employees who stayed home because of exposure to patients, or those who developed symptoms. However, Ford, like other automakers, has also experienced temporary disruptions in production due to shortages of parts from upstream parts suppliers as a result of the outbreak.
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said U.S. factory activity will face “expanding curbs in the coming months that could disrupt and drag down demand in the U.S. and overseas.
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