Markit reports an uptick in activity, with its Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) increasing from 51.0 in October to 52.4 in November. The data show that the sector has seen improvements in the past month across-the-board. The index for new orders, for instance, rose from 51.1 to 52.8. More importantly, new export orders – which have been in contraction territory for several months – also made progress, up from 47.2 to 49.9. This suggests some stability in the international sales, with November’s reading near neutral (e.g., a near equal number of respondents said that export sales were increasing as decreasing).
Output, employment, and raw material inventories also improved. The employment index strengthened from 51.8 to 52.6, its highest point since July. Given recent hesitancies to hire, this is certainly good news. The one downside was that input prices picked up their pace and remained highly elevated, with the index growing from 57.1 to 63.6. This indicates increased pricing pressures for many manufacturers.
Chris Williamson, Markit’s Chief Economist, said, “This is an encouraging sign that the slowdown in the goods-producing sector may have bottomed-out. Manufacturing therefore looks likely to make a positive contribution to economic growth in the fourth quarter after acting as a slight drag in the third quarter. The survey is consistent with manufacturing output growing at an annualised rate of just over 1.0% in November.”
Tomorrow, Markit will release new Flash PMI data for both the Eurozone and China markets. Last month’s reports showed Europe’s woes deepening; whereas, China’s economy made some progress, albeit will continued weaknesses.
Chad Moutray is the chief economist, National Association of Manufacturers.