US Manufacturing Industry Expands at Sharpest Pace in more than 4 Years: Markit
The US manufacturing industry continued to build momentum in June, as output and new orders expanded sharply and overall business conditions improved at the strongest rate since May 2010.
Markit Group’s gauge of US manufacturing activity climbed 1.1 percentage points to 57.5, exceeding estimates for 56.5. A reading above 50 is a general sign of expansion in manufacturing activity, whereas a reading below that level signifies contraction.
Output growth expanded for the third consecutive month, rising at its sharpest pace since April 2010. New business volumes also increased at the sharpest pace since April 2010, driven by stronger domestic demand.
Strong domestic demand offset softer export orders, Markit data showed. New export orders rose at the slowest pace in five months.
The average pace of growth in the second quarter was the strongest since the PMI survey began in early 2007. Manufacturers expressed general optimism this month due to stronger client confidence and a growing pipeline of outstanding work.
“US industry is booming again, with the flash manufacturing PMI hitting its highest for just over four years in June,” said Markit chief economist Chris Williamson in a press release. “The strong reading also rounds off the best quarter for factories for four years, adding to indications that the US economy rebounded strongly in the second quarter from the weather-related weakness seen at the start of the year.”
Manufacturers added around 12,000 workers during month, according to Markit, after adding an average of 15,000 to 20,000 earlier in the quarter. Strong manufacturing employment reflects the stronger growth trend in the rest of the economy. US employers have added an average of 234,000 nonfarm payrolls per month over the last three months.
June was the twelfth consecutive month manufacturing employment rose in the US.
Markit forecasts nonfarm payrolls to increase by another 200,000 in June.
Today’s data reaffirm the economy’s strong rebound following a weaker than expected first quarter that was hampered by severe weather. The US economy contracted 1 percent annually between January and March, according to a revised estimate from the Commerce Department.
The government will produce a third estimate of first quarter GDP growth Wednesday.
The US economy is paced to grow more than 3 percent in the second quarter, according to estimates.
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