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US Manufacturing PMI Rises

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Markit Economics has completed it’s monthly global round up of Manufacturing Purchasing Manager Indices (PMI) with the release of figures for the US. May’s PMI is up to 56.4 from 55.4 in April, this beats market expectations of a 55.5 reading.

The Institute of Supply Management (ISM) has also published a Manufacturing PMI figure for the US for May, this is reading at 53.2, down on the previous months number of 54.9 and short of the 55.4 level anticipated by the market. Additionally, the ISM has also released it’s Prices Paid statistic, this is showing at 60.0, up on April’s 56.5 and ahead of the market consensus 57.0 level.

A final US economic activity indicator released this afternoon is the April Construction Spending data, month on month this is showing a rise of 0.2% compared to the March expansion of 0.6%, market consensus was also for 0.6% growth in spending last month.

This mixed growth data does not throw the US off it’s recovery trajectory in any significant way. A recent statement by the President of the Federal Reserve Bank of Chicago, Charles Evens, has confirmed that the US Fed intends to complete the wind down of it’s asset purchase program on schedule before the end of this year. Evens however cast doubt on the anticipated introduction of a rate rising cycle next year by noting that Fed policy would remain accommodative until such a time as inflation clearly rises above the Fed’s 2% target. According to Evens this event and other economic factors could conspire to postpone monetary tightening until early 2016.

The Chicago Fed President also noted that he expected GDP growth to reach 3% this year and, like most economists, puts the unexpected contractionary reading from Q1 this year down to the harsher than expected weather conditions experienced by the country.

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