U.S. Economy: Manufacturing Pace Is Fastest Since April 2006...

U.S. Economy: Manufacturing Pace Is Fastest Since April 2006

Jan. 4 (Bloomberg) -- U.S. manufacturing expanded in December at the fastest pace in more than three years, capping a late-2009 global factory rebound that helped pull the world out of the worst slump since the 1930s.

The Institute for Supply Managements factory index rose to 55.9, the highest level since April 2006, according to the Tempe, Arizona-based group. Readings greater than 50 signal expansion. Construction spending dropped for a seventh month, the Commerce Department said in a separate release.

Stocks rallied worldwide as reports showed the improvement at U.S. factories is being accompanied by strength in European and Chinese manufacturing. A stimulus-driven rebound in global demand is boosting orders that will encourage producers to ramp up output and fuel a self-sustaining recovery.

There is a broad-based global manufacturing recovery occurring right now, said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. Maki was the No. 1 forecaster of economic growth from January through September in a Bloomberg News survey. Manufacturing was picking up speed as we moved into the end of 2009, and we expect growth will be picking up further.

In Europe, manufacturing grew in December at the fastest clip in 21 months. An index based on a survey of purchasing managers in the 16-nation euro area rose to 51.6 from Novembers 51.2, London-based Markit Economics said. Readings higher than 50 indicate growth.

Chinese factories in December had their fastest growth in five years. A purchasing managers index rose to 56.1, HSBC Holdings Plc and Markit Economics said in an e-mailed statement. The measure of factories in the worlds third-largest economy is based on a survey of more than 400 manufacturers.

At http://www.bloomberg.com/apps/news?pid=20601087&sid=aU2EuxEH4LdI&pos=2

Stocks Rally, Dollar Falls on Manufacturing; Weather Lifts Oil

Jan. 4 (Bloomberg) -- Stocks and commodities rallied and the dollar slumped on the first trading day of 2010 amid signs that manufacturing is improving around the world. Oil climbed above $80 a barrel after freezing weather hit the U.S.

The Standard & Poors 500 Index gained 1.5 percent at 2:31 p.m. in New York. The MSCI Emerging Markets Index jumped 1.6 percent to a 17-month high. Natural gas for February delivery gained as much as 5.8 percent, crude oil rose for an eighth day and orange-juice futures surged the most allowed amid cold temperatures in the U.S. The dollar weakened against 15 of 16 major currencies, sending gold up the most in two months. Copper rallied to a 16-month high after a strike at a mine in Chile.

Manufacturing in China, which led the recovery from the first global recession since World War II, expanded by the most since April 2004 last month, an industry report showed. The U.S. Institute for Supply Managements factory gauge climbed to 55.9, the highest level in more than three years.

The expectations for the new year are supported by some reasonably positive U.S. manufacturing data this morning and China remains a bright spot, said Kevin Caron, a market strategist at Stifel Nicolaus & Co. in Florham Park, New Jersey, which manages about $95 billion in client assets. The bulls still make the case that the global economy is on the mend and theres a decent amount of optimism among strategists for market performance in 2010.

At http://www.bloomberg.com/apps/news?pid=20601087&sid=aCMSfNwetJ5w&pos=1