The manufacturing index prepared by the Institute for Supply Management increased to 48.2 in December from 44.5, a sign that the worst of the 17-month factory slump may be over.
Norbert Ore, chairman of the institute's manufacturing report, said the data indicates that during the first half of the year, manufacturing will regain some momentum. He added that the index is "very positive for the overall economy."
A month after the September 11 terrorist attacks, the index fell to 39.8, its lowest since February 1991. Readings below 50 signal contraction, the institute said, and the index has been below that level since July 2000. The index hasn't increased for two or more straight months since February to April 2001.
Some manufacturers such as General Motors Corp. (GM) are boosting production even as others keep shuttering plants and cutting jobs to cope with sluggish demand during the nation's first recession in a decade. GM boosted production plans by 15,000 vehicles for the fourth quarter and will raise first-quarter output by 7.1% after no-interest financing incentives boosted sales and cut into stockpiles of popular models.
November was the fifth best month on record for auto industry sales. That followed a record pace in October and may have made 2001 the second-best year ever.
The manufacturing index averaged 43.9 in 2001, the lowest annual reading since an average of 38.5 in 1982, when the economy was also in recession, and the third-worst since the index began in 1948.
The Tempe, AZ-based institute surveys more than 400 companies in 20 industries, including clothing, printing, transportation, furniture and plastics.