Fast Growth Detected in U.S. Factory Sector

The nation’s manufacturing sector, thrashed by the recession and achingly slow to recover, finished 2003 with its most robust month of growth in two decades, a survey indicated Friday.

The Institute for Supply Management’s manufacturing index jumped to 66.2 in December from 62.8 in November, strong evidence that the economic turnaround continues to pick up steam.

The new figure was the highest since December 1983 for a sector that has shed millions of jobs over the last three years. The reading, which marked the sixth consecutive month of expansion in manufacturing, was significantly higher than the level of 61 forecast by analysts.

An index reading above 50 indicates expansion; one below 50 indicates that manufacturing activity is contracting. From March through June, the manufacturing index was below 50.

Economists said the index showed that although the beleaguered factory sector still had much ground to make up, it was firmly in recovery mode, helped along by low interest rates and a falling dollar that made U.S.-produced goods cheaper overseas.

“Manufacturing is really the last piece of the puzzle that is falling in place to produce broad-based, sustained economic growth,” said Sung Won Sohn, chief economist with Wells Fargo & Co. in Minneapolis.

The momentum is particularly evident in new orders to factories, said Norbert J. Ore, chairman of the institute’s manufacturing business survey committee. A component index tracking new orders reached its highest level since 1950, rising to 77.6 in December from 73.7 in November.

“The strength in December’s data provides significant encouragement for prospects in the first quarter of 2004,” Ore said.

An index measuring factory production also rose, to 73 from 68.3. The institute’s measure of factory employment rose to 55.5 from 51.

Of the 20 industries making up the sector, 17 reported growth, led by instruments and photographic equipment, leather and furniture. The paper and chemicals industries did not see a pickup in their business. ISM did not gather enough responses from the petroleum industry to gauge its growth.