The Markit Flash U.S. Manufacturing PMI edged up from 54.1 in November to 54.2 in December, a 21-month high. This mostly mirrored assessments about new orders growth (up from 55.5 to 55.6), which also expanded at the fastest pace over that time frame. Other indicators were mixed but encouraging. Employment expanded at its highest rate in 18 months (up from 52.4 to 54.1), whereas output grew modestly but pulled back a little in December (down from 56.0 to 55.1). On a more disappointing note, exports slowed to a near crawl but were positive for the sixth time in the past seven months (down from 51.0 to 50.3). Softer international demand, however, should not be surprising given the strong U.S. dollar. Overall, this report provides some encouragement for manufacturers, many of whom have been rather cautious in their economic outlook for much of the past two years.
Meanwhile, it was a similar story at year’s end in Europe. The Markit Flash Eurozone Manufacturing PMI increased from 53.7 in November to 54.9 in December, a level not seen since April 2011. As such, the continent’s economy continues to move in the right direction, with activity accelerating at a decent rate. The headline PMI has trended higher since bottoming out at 51.2 in February. The underlying data were higher across the board in December, including new orders (up from 54.4 to 56.1), output (up from 54.1 to 56.1), exports (up from 54.1 to 54.7) and hiring (up from 53.4 to 53.7). In addition, manufacturers in France (up from 51.7 to 53.5) and Germany (up from 54.8 to 56.8) were also more upbeat. In particular, French manufacturing activity expanded at its fastest pace in 67 months, an impressive accomplishment given that the data were in contraction territory as recently as September.