U.S. FLASH PMI +0.2 TO 51.3 IN OCTOBER

Muddling through.

The Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) signalled only a modest improvement in U.S. manufacturing business conditions in October. At 51.3, the preliminary ‘flash’ PMI reading which is based on around 85% of usual monthly replies, was only marginally higher than the three-year low of 51.1 recorded in September.

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Manufacturing production increased in October, taking the current sequence of growth to 37 months. Although the month-on-month expansion was only modest, it was nonetheless an improvement from the marginal rise recorded in September.

imageIncoming new work at manufacturing companies also increased in October. Surveyed firms generally commented on new client wins and improved marketing. However, the rate of new order growth slowed to only a modest pace. Although the slower expansion partly reflected a fifth successive monthly fall in new export work, with the rate of contraction broadly unchanged from September, latest data implied a weaker rise in domestic new orders.

Employment in the U.S. manufacturing sector rose for the thirty-third consecutive month in October. Firms largely linked the latest rise in headcounts to greater new order requirements. Despite the rate of job creation having quickened slightly from September, it was the second-slowest for almost two years.

Concurrently, output charges rose for the second month running as firms passed on greater input costs to clients. That said, average selling prices rose only modestly, with some companies suggesting that stronger competitive pressures limited overall price increases.

Although the amount of inputs bought by manufacturing firms increased over the month, stocks of purchases fell at the sharpest rate since September 2009. Finished goods inventories were also depleted at the strongest pace for eight months. Greater demand for inputs added pressure to supply chains, with firms reporting a further lengthening of suppliers’ delivery times in October. Moreover, the latest increase in lead times was the greatest since May.

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