Dec. Factory Gains Fastest Since 1983; Hiring Ramping Up; Orders Index At 53-Yr High; Manufacturers growing so fast they've no choice but add jobs, experts say.(A)

Byline: CHRISTINA WISE

The manufacturing sector grew at its fastest pace in 20 years in December, a key index showed Friday, with factory employment showing a revival.

The Institute for Supply Management's manufacturing index rose to 66.2 in December from 62.8 a month earlier. That's the fastest pace since December 1983. Economists expected 61.5. Readings above 50 indicate growth.

"It's a good report," said Gary Thayer, chief economist with A.G. Edwards. "And it's not just the surface; the details look very encouraging too. The employment numbers showed some of the best job growth we've seen in years."

Indeed, Friday's report showed factories ramped up hiring in December, sending the employment subindex up 4.5 points to a four-year high of 55.5.

"The general public is convinced we've lost manufacturing jobs and we'll never get them back," Thayer said. "But it looks like manufacturing jobs can come back, particularly when they start to rebuild inventories."

Inventory levels are at historic lows, and Friday's report showed they shrank in December. The inventories component fell to 47.3 from 50 in November.