Factory activity rises to nearly 2.5-year high

Factories are humming. Manufacturing activity in the U.S. unexpectedly rose in December to its highest level in nearly 2-1/2 years. The Institute for Supply Management reported Tuesday that its national factory activity index rebounded to 60.7 from 57.5 in November, indicating an expansion in manufacturing. Economists had expected the index to slip.

The pandemic has spurred demand for manufactured goods as the surge in coronavirus infections keeps people from spending on services. Working and studying from home has driven consumers to snap up electronics, home improvement products and other goods like exercise equipment.

What's more, suppliers' delivery times lengthened in December. Slower deliveries likely indicate supply shortages that are related to the pandemic.

The robust manufacturing sector likely helped keep the economy afloat in the fourth quarter even as depleted government pandemic money took a bite out of economic growth.