Economy Check: Manufacturing Index Hits Two-Year High

Service Sector Did Not Show Same Improvement

Manufacturing IndexU.S. manufacturing in November increased at its fastest pace in two and a half years, the latest demonstration of strength from the sector, according to the Institute for Supply Management (ISM). An index from ISM measured at 57.3, a jump from 56.4 in October and the highest reading since April of 2011. New orders and production both increased last month, and employment recorded its highest rise in 19 months. In total, 15 of 18 manufacturing industries showed measurable improvement.

Manufacturing has improved globally in recent months, but not at the same rate of improvement as in the U.S., data shows. “Things seem to be looking up everywhere,” said Bradley Holcomb, chairman of the ISM factory survey. “We’re clearly in a leadership position with high numbers and strong export activity.”

While ISM’s manufacturing numbers were strong, the service sector did not demonstrate the same type of improvement in November, instead growing at its slowest pace since June. The index fell to 53.9 last month, down from 55.4 in October. It was just in August when the service-sector index had reached an eight-year high. The slowed growth was linked to more cautious spending by consumers and a decline in hiring from businesses.

Still, the overall outlook for the service sector is strong, according to economists. “The November decline is a bit disappointing, but the survey is still consistent with decent GDP and jobs growth in the fourth quarter,” Paul Dales, an economist at Capital Economics, said in an interview with the Associated Press. According to an ISM report, nearly 86% of job gains in the past three months have been in the service sector.