Markit Economics said the manufacturing sector's Purchasing Managers Index for the month rose from 52.8 in November to 54, "signaling solid expansion" of the sector with its highest reading since May.
The PMI, which shows business expansion with numbers above 50, failed to reach the early "flash" estimate of 54.2 , but "total new work increased at a solid rate," the report said.
The component index for new orders rose from 53.6 to 54.7 in December. New export orders also rose, the index climbing from 50.3 to 52.6.
The index on output or production rose from 53.5 to 54.5, both numbers indicating that growth accelerated in the last month of the year.
Employment also accelerated the index measuring the number of workers rising from 52.6 to 54.5.
"The final Markit PMI came in slightly below the earlier flash estimate but still indicates that the U.S. manufacturing sector enjoyed a reasonably strong end to the year. Production is growing at a solid pace, buoyed by rising domestic and export sales," said Markit Chief Economist Chris Williamson.
"Firms are also taking on more staff, suggesting that the underlying improvement in demand pushed any worries about the 'fiscal cliff' to backs of manufacturers' minds in the closing weeks of the year.," he said.