At 57.9 in September, the seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) remained well above the neutral 50.0 value, to indicate a robust improvement in overall operating conditions across the manufacturing sector. Moreover, the headline Manufacturing PMI index held at the same level as August’s 52-month high.
Over the third quarter of 2014, the U.S. Manufacturing PMI averaged 57.2, which is the highest seen in any quarter since the survey began in early 2007. PMI readings above 50.0 signal an improvement in business conditions, while readings below 50.0 signal deterioration.
A continued strong improvement in overall business conditions in September reflected further marked rises in output and new business volumes. The latest upturn in production volumes stretched the current period of continuous expansion to five years. September data meanwhile pointed to one of the strongest increases in new work since the survey began in May 2007.
Anecdotal evidence suggested that improving domestic economic conditions and confidence towards the business outlook underpinned the latest increase in new business volumes. Moreover, there was a further boost from increasing export sales across the manufacturing sector in September. Although the pace of new export order growth eased slightly since August, the latest expansion was still one of the sharpest recorded over the past three years.
Increased levels of new work from both domestic and export clients contributed to a robust and accelerated pace of job creation in September. Payroll numbers rose at the fastest rate since March 2012 (and joint-strongest rise for seven years), with survey respondents citing improving demand conditions and associated efforts to boost capacity.
September data indicated a marked increase in backlogs of work across the manufacturing sector, while firms responded to rising workloads by increasing their purchasing activity at a sharp pace. Robust underlying demand, alongside expectations for rising sales volumes in the months ahead, resulted in deliberate inventory building among some panel members. Input stocks and finished goods inventories both increased in September.
Higher demand for raw materials contributed to longer delivery times from vendors and, in some cases, rising input prices in September. The latest increase in overall cost burdens was the sharpest since December 2013. Factory gate prices increased in September, with the pace of output charge inflation also hitting a nine-month high.