According to a median forecast of 68 economists surveyed by Bloomberg with regard to the expected results of The Institute for Supply Management’s closely watched factory index, economists expect the index to rise from 49.5, the score recorded in November and the lowest level since July 2009, to 50.4. A score of 50 marks the line between expansion and contraction.
The reasons behind the rise were put down to growth in the US, which has been helped by a rebound in housing and steady growth in foreign economies both of which are helping to keep factory orders high.
Another key factor was a deal struck by US politicians to avert the introduction of tax increases and budget cuts, which had threatened to send the US back into recession and had put companies off investments. Now that a deal has seemingly been struck, a certain amount of confidence has returned.
Speaking to Bloomberg, Guy Berger, an economist at RBS Securities in Stamford, Connecticut said: “It’s a small improvement, which shows there isn’t extreme near-term pessimism.
“Fiscal policy uncertainty has kept manufacturing in a zone where it’s not growing rapidly, but not shrinking rapidly either.”
