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US manufacturing industry heats up, but softness persists: Markit

H.S. Borji
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The US manufacturing industry expanded sharply in April, as output expanded at the fastest pace in more than three years.

Markit Group’s gauge of US manufacturing activity eased from 55.5 to 55.4. A median estimate of economists polled by Reuters called for 55.8. A reading above 50 signifies expansion in the manufacturing industry, whereas a reading below that level indicates contraction.

Output and new business volumes expanded sharply in April, while input costs reached an 11-month low. New order growth in April was among the fastest in four years, driven primarily by domestic demand. Demand from abroad, while modest, was nevertheless the most notable since August 2013, Markit data showed.

Although the pace of hiring eased to a three-month low, job creation was robust at the start of the second quarter. Manufacturers noted increased demand from clients, a sign employers were willing to ramp-up amid easing pressures on operating margins.

“The April PMI represents a good start to the second quarter,” said Markit chief economist Chris Williamson in a press release. “The manufacturing sector continues to benefit from rising domestic demand, but weak overseas demand continues to mean export performance disappoints, with only modest growth of new export orders recorded again in April.”

April PMI suggests the US economy is on pace to rebound from a lackluster first quarter that saw GDP expand a mere 0.1 percent annually. Although promising, April data are not strong enough to offset the softer trend in the US manufacturing industry. According to Williamson, the “underlying growth rate of the economy has weakened since late last year.”

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