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US Manufacturing Industry Remains Robust but PMI Falls: Markit

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The US manufacturing industry expanded sharply in March, as strong output and new business growth continued to drive recovery despite a fall in the overall PMI reading.

Markit Group’s gauge of US manufacturing activity slipped from 57.1 to 55.5. A median estimate of economists polled by Bloomberg called for 56.8. A reading above 50 signifies expansion in the manufacturing industry, whereas a reading below that level indicates contraction.

Overall business conditions continued to improve in March, with new work expanding at the second-fastest rate since May 2010. The rate of production growth remained close to its three-year high, signalling stronger demand in the domestic economy. Rising output and solid new business growth kept employment expanding for the ninth consecutive month.

“The fall in the composite Manufacturing PMI masks the ongoing resilience of output, new orders and employment growth, all of which continued to rise at historically strong rates in March,” wrote Markit chief economist Chris Williamson in a press release. “That’s because the PMI also includes a measure of supplier delivery times, which dragged the PMI down but only because deliveries were quicker as a result of improved weather.”

The latest PMI reading shows the US manufacturing industry was recovering after a long battle with inclement weather. Although down from the previous month, the PMI reading of 55.5 was the second-highest since January 2013.

According to Williamson, the survey data indicate the goods-producing sector is generating as many as 20,000 new jobs each month. This trend is expected to continue as factories look to expand capacity in the spring.

The ADP Institute will provide a breakdown of employment growth among goods producers Wednesday when it releases its monthly nonfarm payrolls estimate.

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