US Manufacturing PMI Confirmed at 4-Month High: Markit

The IHS Markit US Manufacturing PMI rose to 55.6 in September of 2018 from 54.7 in August, matching the preliminary estimate. The reading pointed to the strongest growth in factory activity in four months, driven by sharper rises in output and new orders, though new business from abroad continued to expand at only a marginal pace. Also, the average for the third quarter was strong overall but signaled the softest expansion since the fourth quarter of 2017.

Production across the goods-producing sector rose at an accelerated and sharp rate in September. The upturn was the fastest since May and was attributed to a sustained rise in new business and more favourable demand conditions. 

New orders received increased markedly, with the rate of expansion quickening to reach a four-month high. Panellists stated that stronger client demand and increased marketing activity drove the rise in order book volumes. New export orders, however, rose marginally as firms noted concerns surrounding the effect of tariffs on foreign demand.

Reflective of a sharp increase in overall new orders, the rate of backlog accumulation accelerated. Moreover, September data signalled the joint-quickest rise in outstanding business in three years. As a result, employment continued to expand, albeit at the softest pace for 13 months.

Growth of purchasing activity accelerated amid the faster expansion of new orders. Input buying rose at the quickest rate since April and pre-production inventories increased at the strongest pace since December 2016.

On the price front, cost burdens continued to rise markedly. The rate of input price inflation matched that seen in August, with panellists commonly attributing the increase to tariffs and greater demand for inputs. Firms were able to partly pass higher costs on to clients, with charges increasing solidly. That said, the rate of inflation dipped to a nine-month low, amid reports that some companies were reluctant to raise factory gate prices.

Manufacturers exhibited ongoing confidence towards the outlook for output, with optimists continuing to exceed pessimists. Expected growth was generally linked to new product development and forecasts of firmer demand conditions. However, the overall degree of optimism was the lowest recorded for a year. 

US Manufacturing PMI Confirmed at 4-Month High: Markit

Markit | Joana Taborda |
10/1/2018 1:51:00 PM