Only really weak point is in New Export Orders.
At 53.7 in January, down from 55.0 in December, the Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™), which is based on approximately 85% of usual monthly replies, signalled the slowest improvement in overall business conditions for three months. That said, the index was above the neutral 50.0 mark and slightly higher than its average for 2013 (53.5). Therefore, the latest survey results still indicate solid underlying growth across the U.S. manufacturing sector.
Slower rates of output and new order growth were the main factors behind the fall in the headline PMI from December’s 11-month high. Although manufacturing production still rose at a solid clip, the latest expansion was the slowest since last October. Companies reporting higher output levels widely commented on resilient domestic demand and efforts to reduce their pipeline of unfinished business in January. Some panel members noted that extreme weather conditions in January had temporarily disrupted output levels.
Meanwhile, latest data indicated a further slowdown in new order growth from November’s 10-month peak. As with the weaker trend for output, there were reports from survey respondents that the unusually cold weather had a negative influence on new business intakes. Moreover, there were some signs of weaker spending patterns among international clients at the start of 2014. Volumes of new export business decreased during January for the first time in four months, although the rate of decline was only marginal.
U.S. manufacturers indicated marked job hiring during January, with the rate of growth only slightly slower than in December. Anecdotal evidence suggested that the temporary nature of disruptions from extreme weather conditions, alongside efforts to reduce backlogs, contributed to solid staff hiring trends at the start of 2014. Levels of unfinished work were reduced for the first time since last August, despite suppliers’ lead-times lengthening to the greatest degree for almost five-and-a-half years. Backlogs were lowered in part through the use of inventories, as finished goods stocks fell at the fastest pace since September 2009.
January data indicated that input cost inflation slowed from the 11-month high recorded at the end of 2013. A number of manufacturers cited rising prices for steel, aluminum and plastics. Meanwhile, factory gate charges across the U.S. sector also increased at a slower pace in January, with the rate of inflation the weakest for three months.