US manufacturing ended 2016 on a strong note, according to two surveys of the industry released on Tuesday.
The Institute of Supply Management’s purchasing manager’s index (PMI) rose to 54.7 in December, in line with economists’ consensus forecast. A reading above 50 shows that the industry was still in expansion.
The new orders index rose by 7.2 points, the biggest increase in more than seven years. Manufacturers reported stronger hiring and higher prices for raw materials, which support other signs of labour-market strength and higher inflation.
Overall manufacturing conditions improved to the strongest level in nearly two years, according to Markit Economics.
Markit’s PMI rose to 54.3, the highest level since March 2015. A preliminary reading put the index at 54.2.
“The upturn is being driven almost entirely by rising demand from domestic customers, with exports stymied by the dollar’s recent surge,” said Chris Williamson, chief business economist at IHS Markit.
Some manufacturers reported a bounce in their clients’ willingness to spend after the November election, as uncertainty about the result had lifted. Several surveys of business confidence have also shown that executives are hopeful for fewer regulations and lower taxes under the new administration.
President-elect Donald Trump has put the manufacturing industry at the heart of his economic message, promising to bring back jobs that he said were moved overseas. The manufacturing sector has been dwarfed by output from services, which accounts for about two-thirds of the US economy.
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