Manufacturing expansion hits six-month high: ISM

NEW YORK (Reuters) - Manufacturing activity grew at its fastest pace in six months in December to cap off a late-year rally in the sector, while a rise in new orders suggested decent momentum in 2012, an industry report showed on Tuesday.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 53.9, its best showing since June, from 52.7 in November. The reading topped expectations of 53.2, according to a Reuters poll of economists. A reading above 50 indicates expansion.

"It's a pretty decent report overall," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York. "We're not roaring ahead here but it's also not collapsing. That's consistent with our overall view of the economy in 2012."

New orders, which economists consider a leading indicator of future activity in the sector, rose to 57.6 from 56.7, while the employment component jumped to 55.1 from 51.8.

The last component, which also hit its highest level since June, was encouraging for an economy still struggling under the weight of an 8.6 percent jobless rate, Porcelli said. Data due on Friday is expected to show the United States added 165,000 new jobs in December but also a slight rise in the jobless rate to 8.7 percent.

The report does suggest that the U.S. manufacturing sector is holding up better than factory output elsewhere in the world.

Data this week showed the euro zone's industrial sector suffered its fifth consecutive month of contraction in December while Asian factories also had a weak month to close out the year.

In Britain, December capped off the worst quarter in the sector in more than two years.

(Reporting By Steven C. Johnson; Editing by Chizu Nomiyama)

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