US manufacturing industry hits 8-month high: Markit
The US manufacturing industry reached an eight-month high in November, rebounding strongly from the prior month. The 16-day government shutdown slowed manufacturing growth to a one-year low in October, when output contracted for the first time since September 2009.
The November PMI reading of 54.3 is 2.5 percentage points higher than the previous month. A median estimate of 17 economists surveyed by Bloomberg projected a modest rise to 52.3. A reading above 50.0 suggests the manufacturing industry is expanding, whereas a reading below the 50.0 level signifies contraction.
Manufacturers reaped the benefits of stronger output, new orders and new export orders, which expanded at a faster pace. New order volumes rebounded strongly in November and were in-line with the 2013 average. New export work expanded at the fastest pace since December 2012, representing the second consecutive month of growth in this area. Job creation was positive for the fifth consecutive month, as manufacturers increased payrolls to meet new business expansion.
According to Chris Williamson of Markit Group, the November PMI “suggests that the manufacturing economy continues to expand at a reasonable but unspectacular rate.” Williamson expects manufacturing output to expand 0.6 percent in the fourth quarter and at an annualized rate of 2.3 percent. However, “even this pace of expansion is barely generating any employment growth,” Williamson would also add.
The employment situation is gradually improving in the United States. In total, 21,000 fewer Americans applied for unemployment benefits last week, according to the Labor Department.
The manufacturing industry could face persistent growth headwinds well into next year, as the Federal Reserve continues to weigh the future of its record stimulus program. However, the recent drop in inflation makes a bond tapering less imminent, and could give the Fed greater impetus to maintain the pace of monetary policy for the foreseeable future. October consumer inflation fell to a four-year low in October, according to the monthly Consumer Price Index.
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