Economic Watch: Manufacturing Continues Strong Performance
A measure of the strength of the U.S. manufacturing sector was unchanged this month from August, but remains strong at a 52-month high, according to a new report released Tuesday morning by the financial information services provider Markit Economics.


A measure of the strength of the U.S. manufacturing sector was unchanged this month from August, but remains strong at a 52-month high, according to a new report released Tuesday morning by the financial information services provider Markit Economics.
At 57.9, its seasonally adjusted Flash U.S. Manufacturing Purchasing Managers’ Index remained well above a neutral reading of 50, indicating robust improvement in overall operating conditions across the manufacturing sector.
Over the third quarter of 2014, the U.S. Manufacturing PMI averaged 57.2, which is the highest seen in any quarter since the survey began in early 2007. PMI readings above 50 signal an improvement in business conditions, while readings below 50 indicate deterioration.
A continued strong improvement in overall business conditions in September reflected further marked rises in output and new business volumes. The latest upturn in production volumes stretched the current period of continuous expansion to five years. September data meanwhile pointed to one of the strongest increases in new work since the survey began in May 2007.
Anecdotal evidence suggests that improving domestic economic conditions and confidence towards the business outlook underpinned the latest increase in new business volumes. Also, there was a further boost from increasing export sales across the manufacturing sector in September. Although the pace of new export order growth eased slightly since August, the latest expansion was still one of the sharpest recorded over the past three years.
“The flash PMI signaled another month of impressive growth of the U.S. manufacturing economy. The third quarter as a whole has seen the strongest expansion since the sector began to recover from the financial crisis,” said Chris Williamson, chief economist at Markit. “The survey suggests the manufacturing sector will have helped drive a further robust expansion of the economy as a whole in the third quarter. We expect U.S. gross domestic product to grow at an annualized rate of at least 3% and as much as 4%, depending to a large extent on how the vast services economy fared in September.”
He said job creation has rebounded strongly from the lull seen earlier in the summer and has risen to a rate previously not exceeded in the post-crisis survey history.
“Companies are clearly optimistic, building capacity and expanding to meet anticipated future sales growth,” Williamson said. “Policymakers will be comforted to see the economy growing with such strong momentum, though with every upbeat piece of economic data the prospect of an initial hike in interest rate draws closer, especially with the survey signaling an upturn in price pressures.”
Increased levels of new work from both domestic and export clients contributed to a robust and accelerated pace of job creation in September, according to the report. Payroll numbers rose at the fastest rate since March 2012, with survey respondents citing improving demand conditions and associated efforts to boost capacity.
September data also indicated a marked increase in backlogs of work across the manufacturing sector, while firms responded to rising workloads by increasing their purchasing activity at a sharp pace.
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