Friday, September 21, 2012

USA Manufacturing: "Another month of tough business conditions"

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Markit: Monthly USA PMI

This expansion (> 50) is in contrast to the ISM Manufacturing PMI which is reporting a contraction and posted on this website.

The preliminary ‘flash’ PMI reading, which is based on around 85% of usual monthly replies, remained only fractionally higher than the near three-year low recorded in June.

Markit USA Manufacturing Index (PMI) by Month

Chris Williamson, Chief Economist at Markit, said:

U.S. manufacturers reported another month of tough business conditions in September, rounding off the weakest quarter for three years.

With output growing at the slowest pace since the recovery began in October 2009, the manufacturing sector may have even acted as a slight drag on the economy in the third quarter. Gross domestic product therefore looks likely to have expanded at a much weaker pace than the 1.7% annualised rate seen in the second quarter, slipping closer towards stagnation.

“The slowdown has been accompanied by an ongoing reluctance to take on more staff compared to earlier in the year. Although some improvement was seen in the employment measure, the survey is consistent with official data showing another drop in manufacturing payroll numbers in September following the 15,000 decline seen in August.

The principal cause of weakness remains the export market, with new export orders falling for the fourth successive month, and at an advanced rate of decline, reflecting the economic downturn in the Eurozone and slower growth in previously strong markets such as China and Japan.

Alongside the worrying weakness of output and employment, the survey also showed price pressures to have risen markedly, with high oil prices in particular driving up input costs at manufacturers. Rising costs in turn fed through to higher selling prices and add to risk that consumer price inflation could pick up again in September.

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