WASHINGTON: The US manufacturing sector recovered in November, rising from a six-month low on strong demand and as trade war anxieties eased somewhat, according to an industry survey released on Monday (Dec 3).
The rosy numbers did not reflect the trade truce announced over the weekend by Washington and Beijing, who agreed to halt further escalations in their tariff battles.
The Institute for Supply Management's manufacturing index unexpectedly rose 1.6 points from October's reading to 59.3, though it was still lower than September's level.
As in October, 13 of 18 industries reported expansion and three reported contraction: primary metals, non-metallic minerals and printing.
New orders jumped 4.7 points to 62.1 per cent and the indices for employment and inventories also rose.
Timothy Fiore, chairman of the ISM manufacturing survey committee, told reporters that Saturday's announcement at the Group of 20 summit in Argentina would likely offer some relief to manufacturers - who had ramped up imports to beat an expected Jan 1 increase in duty rates on many Chinese goods.
"This is definitely going to provide some relief on that. I don't think this is really a relaxation. It's a pretty much a confirmation of the status quo," he said.
The share of survey respondents who expressed concerns about tariffs - which have driven up input costs, destabilised supply chains and raised prices - continued to be high but fell below the 40 per cent recorded in the prior five months.
Respondents in the chemical products and fabricated metals sectors complained of labour shortages as well.
Fiore said the stronger demand boded well for the start of 2019, but acknowledged the current manufacturing expansion may have peaked.
Ian Shepherdson of Pantheon Macroeconomics noted that export orders remained at a two-year low and had not recovered from October's decline.
"Overall, this is a very solid ISM, and something of a relief after October's weakness, but real risks remain," he said in a client note.