The U.S. manufacturing sector displays booming conditions. Domestic demand is strengthening while increasing foreign demand amid weaker foreign economies indicate market share gains for U.S. manufacturers.
The seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 58.0 in August, up sharply from 55.8 in July and the highest reading for over four years. All five components of the Manufacturing PMI had a more positive influence on the headline index than in July, led by a robust and accelerated increase in employment.
August data indicated a further steep rise in production levels across the manufacturing sector. The rate of output growth picked up slightly since July and was one of the fastest seen over the past four years. Survey respondents mainly cited improving domestic economic conditions and an associated upturn in client spending.
Volumes of new work received by manufacturing companies rose at a sharp pace during August and, in line with the trend for production, the rate of expansion held close to its strongest since early 2010. Manufacturers also benefitted from a solid rebound in new export orders in August, with the pace of expansion picking up from July’s six-month low. Moreover, the latest increase in new business from abroad was the steepest for three years.
Stronger demand patterns, an accumulation of backlogs for the seventh month running, and improving confidence towards the business outlook all contributed to a further increase in manufacturing payroll numbers in August. Moreover, job creation picked up since July and the latest rise in staffing levels was the fastest for almost a year-and-a-half.
Greater production schedules and increased new business wins resulted in a sharp expansion of input buying across the manufacturing sector in August. The latest rise in purchasing activity was the fastest since the series began in May 2007, which in turn contributed to a survey-record increase in pre-production inventories in August. Stronger demand for inputs led to the most marked lengthening of suppliers’ delivery times since the snow-affected first quarter of 2014.
Meanwhile, stocks of finished goods rose for the second successive month, but the pace of expansion remained modest.
Input cost inflation was unchanged since July and remained subdued in comparison with the survey’s historical average. August data also indicated a further rise in manufacturers’ factory gate charges. The latest increase in output prices was little-changed from July’s seven-month high, and a number of survey respondents reported passing on a proportion of their higher input costs to clients in August.