US Factory Activity Growth Confirmed At 7-Month Low

The seasonally adjusted Markit final US Manufacturing PMI fell to 52.8 in April 2017 from 53.3 in March, in line with the preliminary estimate. It was the lowest reading since September 2016, as a slowdown in output and new business growth more than offset a slight rebound in job creation.

Manufacturing production increased for the eleventh successive month in April. The latest survey signalled that the rate of expansion nonetheless eased to its weakest for seven months. New order growth also moderated to its slowest since September 2016, which survey respondents mainly linked to more cautious spending among domestic clients. Meanwhile, export sales gained momentum in April, with the latest rise in new work from abroad the fastest since August 2016.

Slower growth of total new work contributed to the weakest upturn in purchasing activity across the manufacturing sector since September 2016. Manufacturers also sought to reduce their inventory holdings, with stocks of purchases falling slightly for the first time in seven months. In contrast, postproduction inventories increased at a modest pace in April.

Backlogs of work rose for the eleventh month running and the latest expansion was the fastest since October 2015, suggesting renewed pressures on operating capacity. As a result, employment growth rebounded from the seven-month low recorded in March. Job creation was also supported by positive sentiment regarding the outlook for production over the next 12 months. The degree of business optimism edged up in April, but remained below the peak seen at the start of 2017.

Meanwhile, the latest survey highlighted strong cost pressures across the manufacturing sector. The rate of input price inflation accelerated to its fastest since September 2014. A number of panel members cited higher prices for metals, especially steel. Efforts to pass on higher costs to clients led to the most marked rise in factory gate charges for nearly twoand-a-half years.

US Factory Activity Growth Confirmed At 7-Month Low

Markit | Joana Ferreira |
5/1/2017 1:54:48 PM