US Manufacturing PMI Revised Higher: Markit

The IHS Markit US Manufacturing PMI was revised higher to 54.7 in August of 2018 from a preliminary of 54.5 but remained below 55.3 in July. The reading pointed to the slowest expansion in factory activity since November as rates of output and new order growth eased although remained solid. On the other hand, business confidence reached the highest in three months.
Markit | Joana Taborda | 9/4/2018 1:51:53 PM
Output growth across the goods-producing sector remained strong, despite the rate of expansion softening to an 11-month low. Panellists that reported higher output generally linked this to greater new order volumes.

Similarly, new business rose at a slightly slower, albeit still strong, rate in August. Anecdotal evidence stated that greater new orders from home and abroad had driven growth. Moreover, new business from abroad returned to expansionary territory. However, some panellists noted that client demand was relatively lacklustre when compared to the start of the year, leading to a slightly weaker overall upturn.

Consequently, rates of employment and backlog growth remained solid. This was despite rates of growth softening to four-month lows. Anecdotal evidence commonly stated that job creation stemmed from increased production requirements and greater efforts to recruit skilled labour. On the price front, manufacturers signalled a marked rise in input costs. Although the rate of inflation softened to a six-month low, it remained marked and was linked to new trucking regulations, higher raw material prices (in part driven by tariffs), and supply shortages (especially for electronics components). 

Average charges rose strongly, with respondents reportedly partly passing higher costs on to clients in order to protect profit margins. Although dipping to a five-month low, the rate of inflation remained well above the long-run series trend.

Meanwhile, supplier delivery times lengthened further in August. Although lead times increased to the weakest extent since February, the rate of deterioration remained historically marked. Panellists continued to report widespread stockpiling of inputs, with buying activity rising solidly.

Finally, expectations towards output over the coming 12 months improved. The degree of confidence reached a three-month high. 

US Manufacturing PMI Revised Higher: Markit