"We finished the year on an uptick, but there isn't a firm rebirth of confidence on the part of businesses"
- Tim Quinlan, an economist at Wells Fargo Securities LLC
Manufacturing sector in the world's largest economy expanded slightly in December, adding to signs that the industry is stabilizing after reaching a three-year low a month earlier. A gauge, which measures national factory activity, rose to 50.7 last month after an unexpected contraction in a month earlier, when the index fell to 49.5. Despite the fact the reading came above the 50 level, which separates growth from contraction, it is still well off the 54.1 reading seen in January 2012, suggesting manufacturing is still struggling to regain the momentum it had at the beginning of the last year. At the same time, as the U.S. senate passed a budget bill trying to avert the so-called "fiscal cliff", confidence among manufacturers is expected to grow.
"We finished the year on an uptick, but there isn't a firm rebirth of confidence on the part of businesses," said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected 51 for the December factory index.
"What is interesting in this report is that you would think the negative headlines surrounding the fiscal cliff would have put pressure on manufacturing," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.
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