US manufacturing industry remains elevated in September: Markit
The US manufacturing industry advanced at a strong pace in September, as a strong rise in output and new orders supported the fastest pace of employment growth in two-and-a-half years.
Markit Group’s flash estimate of US manufacturing activity was 57.9 in September, unchanged from the previous month’s 52-month high. A median estimate of economists called for a slight increase to 58. A reading above 50 is a general sign of expansion in manufacturing activity, whereas a reading below that level signifies contraction.
Over the course of the third quarter, US manufacturing PMI has averaged 57.2. That’s the highest quarterly average since the survey began in 2007.
The flash estimate represents analysis on approximately 85 to 90 percent of total survey responses. Markit Group will release its final manufacturing PMI estimate on October 1.
Output and new orders continued to rise at a strong pace in September, reflecting further improvement in overall business conditions. Manufacturers reported one of the strongest increases in new work since the survey began in May 2007, as booming domestic economic conditions continued to support overall manufacturing activity.
Export sales continued to rise in September, expanding at one of the fastest clips in three years, Markit data showed.
Higher levels of new work kept job creation elevated, as payroll numbers rose at the sharpest rate since March 2012.
Meanwhile, work backlogs increased sharply throughout the manufacturing sector, which led to an increase in purchasing activity.
“The flash PMI signalled another month of impressive growth of the US manufacturing economy. The third quarter as a whole has seen the strongest expansion since the sector began to recover from the financial crisis,” said Markit chief economist Chris Williamson in a statement.
Today’s figures continue to support the view manufacturing activity is playing a leading role in supporting US recovery following a disappointing first quarter slowdown. The August and September PMI readings suggest the sector’s growth momentum was sustained through the third quarter, as overall business conditions and employment levels continued to improve.
Earlier this month the Board of Governors of the Federal Reserve System said total industrial output declined 0.1 percent in August, while the capacity utilization rate pointed to more spare resources in the industrial sector.
The manufacturing component of total industrial output declined 0.4 percent in August, official data showed.
Manufacturing accounts for around 12 percent of the US economy and three-quarters of total production, which means GDP is sensitive to fluctuations in manufacturing output
The Commerce Department on Friday will issue a revised estimate of second quarter growth that includes more complete data, including figures from the Quarterly Services Survey. Economists forecast another revision to the GDP estimate to reflect an annual growth rate of 4.5 percent between April and June.
Government economists revised their second quarter estimate to 4.2 percent from 4 percent last month.
Regarding the present quarter, economists generally believe the economy is growing above 3 percent annually.
“We expect GDP to grow at an annualised rate of at least 3% and as much as 4%, depending to a large extent on how the vast services economy fared in September,” Markit’s Chris Williamson added.
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