The ISM Manufacturing Index registered 59.7 points in December, up 1.5 percentage points from the previous month, according to the Institute for Supply Management. December's reading indicates the sixteenth consecutive month of expansion in manufacturing, as readings over 50 points denote expansion.
In December, the gauge of new orders increased to 69.4, the highest in almost 14 years.
The strength in almost every industry created "a really strong report" meaning the sector is now in its 16th consecutive month of expansion, explained Timothy Fiore, chair of ISM's Manufacturing Business Survey Committee.
"The only mild disappointment here is a 2.7-point dip in the employment component, but it's still high at 57.0, and overall this is a very strong report".
Manufacturers expected to see six months of price increases for some raw materials in the wake of the late summer hurricanes - especially Hurricane Harvey's hit to the key chemical and oil production facilities in Houston.More news: Delta Raises Profit Forecast, Shares Jump
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Readings above 50 indicate expansion in the manufacturing industry.
"Comments from the panel reflect expanding business conditions, with new orders and production leading gains, employment expanding at a slower rate, order backlogs expanding at a faster rate and export orders and imports continuing to grow in December", said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee. "The customers' inventories index declined and remains at low levels".
Only two industries, wood products and textiles, reported contraction last month.
Andrew Hunter, US economist at Capital Economics, said the rebound in the ISM manufacturing index leaves it close to a 13-year high and at a level that historically has been consistent with GDP growth accelerating to more than 4% in annual terms.
New orders to manufacturers was the report's major highlight, reaching an nearly 14-year-high, ISM said. Across the subcomponents, production rose to 65.8 from 63.9 and new orders jumped to 69.4 from 64.