Growing Domestic Manufacturing Sets Strong Economic Tone for New Year

The first day of trading in 2012 saw a promising stock market, which may set an optimistic tone for the economy—especially in conjunction with other ongoing positive indicators. On Tuesday, the Dow Jones Industrial Average and the S&P 500 both rose about 1.5 percent by close.

That enthusiasm likely has to do with a buoyant manufacturing report by the Institute for Supply Management, a not-for-profit research and certification organization that focuses on institutional buying. Domestic production and employment indexes both increased 3.3 percent, while imports grew by five percent and exports increased by one point.

“Manufacturing is finishing out the year on a positive note, with new orders, production and employment all growing in December at faster rates than in November, and with an optimistic view toward the beginning of 2012 as reflected by the panel in this month's survey,” wrote organization chair Bradley Holcolm.

A strong performance in December's manufacturing sector—likely linked in part to the holiday shopping season—was the 29th consecutive month of growth, according to the report, and the 31st consecutive month of growth for the economy as a whole.

The most recent data on the job market also showed gains toward the end of the year, with unemployment dropping more than expected in December, following a strong previous month.

Analysts remain cautious, though, regarding the economy as a whole, especially regarding the international effects of the European crisis.

“We are very nervous about the impact on U.S. exporters of the recession in Europe, which is likely to prove deep and long,” High Frequency Economics told Reuters. “Exports of goods are very important to manufacturing export-focused firms.”

(Read more about Jobs and the Economy at Campus Progress.)

Optimism this week follows a year that saw continued concern over the economy, which has not yet recovered from the 2008 recession, and during which many took action against what they saw as widespread structural injustices.

2011 was marked by economic and social unrest around the world, as well by the highest-profile protest movements in recent memory. A wave of demonstrations and revolutions termed the Arab Spring has toppled regimes in Tunisia, Egypt and Libya, while protests against corporate influence and economic disparity have spread from Wall Street across much of the Western world.

The performance of the economy in the coming year, and in particular the job market, is likely to play a key role in the upcoming presidential election.

Jon Christian is a staff writer with Campus Progress. Follow him on Twitter @Jon_Christian.

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