Markit's US Manufacturing Sample Marks Acceleration

Markit's U.S. manufacturing sample is reporting sharp acceleration in activity this month, at a flash October index of 53.2 for a nearly 2 point gain from September and the strongest rate of growth since October last year. New orders, backlog orders and output are also at 1-year highs with input costs, in what is another sign of rising demand, at a nearly 2-year high. And some of the input costs are being passed through to selling prices which are up for the first time in three 3 months and, like inputs, at the strongest rate in nearly 2 years. The sample is sharply boosting their stocks of inputs where related inventories show their first build since November last year.

This report had been citing uncertainty over the presidential election as a negative for the nation's factory sector but now attributes the greater activity to hopes of a post-election upturn in client demand.

But there are negatives this month including continued weakness in hiring which some in the sample say is now increasing capacity pressures. And strength is isolated to domestic demand as export sales remain soft.

Still, this report confirms the strength seen in last week's Philly Fed data where news orders came in at a 2-year high. The factory sector, which has been struggling all year, may be poised to end 2016 on a strong note.

Recent History Of This Indicator:
The manufacturing PMI is expected to remain soft for the October flash, at a consensus 51.2 vs a final 51.5 in September and 51.4 for the September flash. Growth in new orders was the weakest of the year in September while export sales, due to what the report said was the strong dollar, contracted for the first time in four months. Unlike most other reports, this report has been citing the presidential election as a factor, specifically a negative one that it says has been delaying customer decisions.