The Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) signalled the strongest improvement in manufacturing business conditions in five months during August. The flash PMI index, which is based on approximately 85% of usual monthly replies, was up slightly from July’s 53.7 to 53.9, and suggested a moderate expansion of the manufacturing sector.
Firms received a larger volume of new orders in August, with a number of companies linking this to greater demand and new client wins. Moreover, the rate of growth was strong and, having accelerated for the fourth month running, the fastest since January. Both domestic and export orders increased over the month. Although new export work rose modestly, partly reflecting increased global activity, the rate of growth eased from July’s seven-month peak.
Production was raised to accommodate the increase in new orders. Output rose moderately, but the rate of growth nonetheless slowed to a three-month low and was weaker than the average for the year so far.
Concurrently, stocks of finished goods were depleted at the strongest pace since September 2009. Backlogs of work were meanwhile broadly the same as one month previously.
Manufacturing employment increased for the second month running in August. The rate of job creation was moderate and, having quickened slightly since July, the fastest in four months. Firms that hired additional staff generally cited increased workloads.
The rate of input price inflation eased during August, having reached a five-month peak in July. Nonetheless, input costs continued to rise strongly, with steel and packaging commonly reported as having increased in price. Manufacturers passed on greater costs to clients by raising their selling prices. On average, output charges rose at the strongest pace since March.
Reflective of increased new work, the quantity of purchases bought by manufacturing firms rose further during August. At the same time, stocks of purchases were depleted for the second month running. Suppliers’ delivery times lengthened further as a result of the increase in purchasing activity, with the latest increase in lead times the greatest since April 2012.