U.S. manufacturing expands

American factory managers saw orders for consumer goods increase in December, that drove manufacturing data higher. The question is, are we buying refrigerators because our old one just died or because we believe in the health of the economy?

A little good news today from the people who do the ordering at American factories: the Institute for Supply Management survey for December suggests a bit more expansion at manufacturing plants, compared to the month before. The index rose to 53.9 from 52.7 in November. That activity, as well as employment in manufacturing, hit the highest levels in six months. Economists surveyed by Bloomberg News had expected 53.5, and any number above 50 indicates expansion.

The upshot of the report? After years of getting by with their worn out cars and home appliances, Americans went shopping. But, when it comes to news we can really celebrate, one can argue there's a difference between buying a new refrigerator because the old one conked out, and buying one because you want the fancy model with double-doors and stainless steel. It's the difference between buying because you have to and buying because you feel secure about the road ahead.

Patrick Barkey is Director of the Bureau of Business and Economic Research at the University of Montana in Missoula. Barkley says he's pleased to see the modest expansion in factory orders, but he's not sure there's enough momentum in these numbers to get us to the next sign of larger recovery in the U.S.

For that, Barkey says all eyes are on the employment numbers coming out later this week.

About the author

David Brancaccio is the host of Marketplace Morning Report. Follow David on Twitter @DavidBrancaccio

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