United States PMI

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United States: Manufacturing remains strong despite moderation in September

October 1, 2014

In September, the ISM manufacturing index moderated from the 59.0% recorded in August to 56.6%. The result undershot market expectations of a fall to 58.5%. However, the index remains above the 50.0% threshold that indicates expansion in the manufacturing sector.

The moderation was driven mainly by a drop in the new orders category, although employment, inventories, and supplier deliveries also lost ground compared to the previous month. In contrast, the production category was broadly stable at August’s multi-year high.

More recent survey data point to a weakening in the manufacturing sector in October. The Markit Flash US Manufacturing PMI came in at 56.2, which was below the 57.5 tallied in September and marked the lowest reading in three months. The moderation was driven by slower growth in the new orders and output categories. Meanwhile, October data show ongoing job creation in the manufacturing sector. Markit concluded that October’s result, “will no doubt add to the view that policymakers should be in no rush to raise interest rates, with output and order book growth slowing.”

FocusEconomics Consensus Forecast panelists expect that industrial output will increase 3.9% this year, which is up 0.2 percentage points from last month’s forecast. For 2015, panelists see industrial production accelerating to a 4.2% expansion.

Author:, Economist

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United States PMI Chart

USA PMI September 2014

Note: Composite index in the Manufacturing Report on Business (PMI). Readings above 50% indicate an expansion in the manufacturing sector while readings below 50% point to a contraction.
Source: Institute for Supply Management.

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