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Severe Weather Disrupts US Manufacturing Industry: Markit

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Severe Weather Disrupts US Manufacturing Industry: Markit

US manufacturers stumbled in January, as severe weather contributed to the sharpest lengthening of suppliers’ delivery times in more than five years.

Markit Group’s gauge of US manufacturing activity, which is based on a survey of more than 600 American manufacturers, declined for the first time since October. The headline PMI indicator fell from 55.0 to 53.7 in January. A median estimate of economists polled by Bloomberg and Thomson Reuters called for 55.0. A PMI reading above 50.0 signifies expansion in the manufacturing sector.

Manufacturing activity was hampered by slower growth rates in outputs and new orders, which were the main factors behind the fall in PMI. Extreme weather conditions, among other factors, disrupted output levels temporarily for some producers. At the same time, new export business declined for the first time in four months. Although overall production remained positive, the rate of growth was the slowest since October.

“The flash PMI indicates that the manufacturing sector continued to grow at the start of 2014, and that the underlying trend most likely remained reassuringly robust,” said Chris Williamson, chief economist at Markit. “After allowing for companies that saw production and sales disrupted by the cold weather, the rate of growth of output and orders remained as strong, if not stronger, than seen late last year.”

Manufacturing expansion has been one of the key lynchpins of US recovery. After declining unexpectedly in December due to severe weather, producers are well positioned to carry-forward last year’s momentum into February. According to Markit, manufacturing employment is expanding at a pace of 10,000 per month, based on quarterly output growth of 2 percent.

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