Manufacturing growth slows in December

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The Purchasing Managers Index dropped 4 points to 54.2 percent in December, a level that still signifies growth, reported the Institute for Supply Management. December was the 31st consecutive month of economic growth in manufacturing and the 50th consecutive month of overall economic growth, ISM said.

November’s PMI was 58.1: A reading above 50 indicates that manufacturing generally is expanding. A PMI in excess of 42.7 percent, over a period of time, generally indicates an expansion of the overall economy. The past relationship between the PMI and the overall economy indicates that the average PMI for January through December 2005 – 55.5 – corresponds to a 4.6 percent increase in real gross domestic product on an annual basis.

“In December, we saw a decline in the rate of growth of both new orders and production, but both indexes are at levels that support economic growth,” says Norbert Ore, chair of the ISM Manufacturing Business Survey Committee. “We saw a significant slowing in the upward pricing spiral that has been a source of continuing concern for manufacturers. A strong fourth quarter should carry significant momentum forward into 2006.”

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