U.S. manufacturing continued to expand through November, growing at a faster pace than in previous months due to a rise in new orders and production.

Business activity in the United States manufacturing sector posted strong growth in November, and the rate of expansion increased following a slowdown in October. Steady gains in demand and production helped boost manufacturing conditions to their highest level in five months.

According to the Institute for Supply Management’s (ISM) latest manufacturing Report on Business, U.S. manufacturing expanded for the 28th consecutive month in November, reflecting overall growth in the national economy, which grew for the 30th consecutive month.

The ISM purchasing managers’ index (PMI), a key monthly gauge for the factory sector, rose to 52.7 last month, up from 50.8 in October and marking the highest reading since June. Readings above 50 indicate overall growth for the industry. Despite the gain, November’s PMI remained below the 12-month average of 55.6. The index has been on a downward growth trend since peaking at 61.4 in February 2011.

“The manufacturing figure was punctuated by gains in orders and production in the same month that consumer confidence rebounded and companies beefed up their payrolls,” Bloomberg News reports. “Corporate purchases of new equipment and stronger holiday spending may help sustain U.S. factories after reports today showed the industry shrank in China and Europe.”

The ISM new orders index increased to 56.7 in November, up from 52.4 in October and marking the second consecutive month of growth. The production index rose to 56.6 in November, up from 50.1 in October and marking the third consecutive month of growth following a period of contraction in August, which was the first time production had shrunk since May 2009.

Eight of the 18 industries tracked by the ISM reported growth last month: wood products; textile mills; petroleum and coal products; primary metals; food, beverage and tobacco products; computer and electronic products; apparel, leather and allied products; and paper products.

Meanwhile, nine industries experienced contraction: miscellaneous manufacturing; non-metallic mineral products; plastics and rubber products; printing and related support activities; electrical equipment, appliances and components; chemical products; fabricated metal products; transportation equipment; and machinery.

The latest monthly findings generally exceeded expectations, as economists polled by MarketWatch had forecast a PMI of 52 in November, slightly lower than the actual result.

“The aggressive gain in November activity returns the index to a normal position that is slightly above its 20-year average. A very strong improvement in new orders and production paints a rosy picture for near-term manufacturing activity,” Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, wrote in an analysis of the ISM report. “In addition, strong gains in motor vehicle production, capital equipment production and oil field goods continue to drive moderate industrial growth.”

According to the Federal Reserve this week, economic conditions in the U.S. as a whole improved at “a slight to modest pace” from early October to mid-November, with 11 out of 12 of the central bank’s districts posting increases in business activity.

Manufacturing was a major contributor to the recent gain, expanding in every region except the New York district, the Fed reports in its latest regional business survey, the Beige Book. Metal fabrication and the automotive industries were particularly strong performers in the October-November period.

“This might give the central bank room to ease monetary policy further if growth weakens at the start of next year, a fear that has been exacerbated by ongoing turmoil in Europe,” Reuters notes. “For now, the report confirmed a long-standing trend in the recovery: the expansion remains firmly in place, but underlying conditions are too weak to bring down a 9 percent jobless rate.”

Given the instability in international markets, especially in the Eurozone, where many countries are struggling to contain the debt crisis and avert another recession, financial policymakers are acting to reduce the potential negative impact on U.S. businesses.

“The precarious state of the European Union led the Federal Reserve and other major central banks on Wednesday to take steps to ease the strain on global financial markets,” the Associated Press explains. “The coordinated action aims to stimulate economic growth by making it easier for banks to lend to each other and to businesses by providing dollars if they need them.”

Earlier

Manufacturing Growth Decelerates in October

Manufacturing Grows at Fastest Pace in Almost 7 Years

Resources

November 2011 Manufacturing ISM Report on Business
Institute for Supply Management, Dec. 1, 2011

ISM Index of U.S. Manufacturing Increases
by Bob Willis
Bloomberg News, Dec. 1, 2011

U.S. Manufacturing Lightly Accelerates: ISM
by Steve Goldstein
MarketWatch, Dec. 1, 2011

MAPI Analysis on ISM Index: ‘Rosy Picture’ for Near-Term Manufacturing Activity
by Daniel J. Meckstroth
Manufacturers Alliance/MAPI, Dec. 1, 2011

Full Report: Current Economic Conditions
The Federal Reserve Board, Dec. 1, 2011

Fed Says U.S. Growth Moderate, Hiring Still Subdued
by Pedro Nicolaci da Costa
Reuters, Nov. 30, 2011

Fed Survey: Most Areas See Slow to Moderate Growth
by Martin Crutsinger
The Associated Press, Nov. 30, 2011