By Xavier Fontdegloria

Manufacturing activity in the U.S. grew in December at the fastest pace in more than six years, data from a survey compiled by IHS Markit showed Monday.

The final reading for the U.S. Manufacturing Business Activity PMI Index for December came in at 57.1, up from the preliminary figure of 56.5 and above the 56.7 level in November.

Economists polled by FactSet expected the indicator to remain unchanged from its preliminary reading.

December data show that overall manufacturing activity in the U.S. continued to grow for the sixth consecutive month, as a level above 50 indicates expansion, and that the pace of this expansion accelerated in December compared with that of the prior month.

The improvement in operating conditions was supported by further substantial increases in output and new orders, but the headline figure also was pushed higher by severe supply chain disruptions, IHS Markit said.

"Manufacturers reported a strong end to 2020, with production and order books continuing to grow, albeit with the rates of expansion slowing as a result of rising virus case numbers and related restrictions," Chris Williamson, chief business economist at IHS Markit, said.

Production growth remained marked in December despite the rate of expansion easing slightly from November's recent high, while the rate of expansion in new orders also softened as some firms reported supplier delays and reduced capacity due to additional Covid-19 related restrictions.

Producers of machinery and equipment reported sustained strong demand as well as producers of inputs to other factories, but producers of consumers goods reported a marked downturn in orders and production, Mr. Williamson said.

Firms noted a substantial deterioration in vendor performance as supply chain disruptions escalated amid supplier shortages and transportation delays stemming from a lack of available drivers and Covid-19 travel restrictions.

"These delays are limiting production capabilities as well as driving producers' input prices sharply higher, adding to the sector's woes," Mr. Williamson said.

Output expectations slid slightly from those seen in November, as a rise in virus cases weighed on sentiment. Nevertheless, firms were strongly optimistic of a rise in output over the coming year.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

(END) Dow Jones Newswires

01-04-21 1024ET