US economy has shown continuous improvement in last 54 months said US supply executives in last PMI release. The economy is expected to grow at the rate of 2.7% in next year compared to present growth rate of 1.7%. Better growth is likely to advance manufacturing activities. Last month US manufacturing index reached at two and half year high at 57.3 while this time, on Jan 2, the index is expected to improve slightly low at 56.8.
New Orders, Production and Employment have grown at faster rate and Industrial production has also increased at the year high of 1.1% for Nov. Tapering is not likely to have major impact on manufacturing activities. We may not see lending problems from banks due to stimulus cut. Growing housing demand is a better example that has shown willingness of people to spend more; it also indicates increased risk appetite.
Asian economies are expected to grow by 7.5% next year, a little lower than its previous records, which may affect demand for US durables and non durables. A Global Purchasing Managers Index from JPMorgan Chase & CO and Markit Economics gained fifth time in a row. Manufacturing expansion was also seen at European market as the index rose more than forecast.
Global markets have shown better results in the last quarter. Global growth is expected to rise at the rate of 2.8% in next year compared to present rate of 2%. Overall, improving market conditions may bring expected result to US PMI.