October PMITM data from IHS Markit signalled a further improvement in the health of the U.S. manufacturing sector. The rise in the PMI stemmed largely from rates of output and new order growth accelerating during the month, despite export orders contracting. Meanwhile, signs of reduced pressure on capacity led to a slower rise in employment, with business confidence also historically subdued though picking up compared to September. At the same time, input prices rose at the fastest rate since the start of 2019 fuelled by supplier shortages, but average charges increased only modestly.
The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 53.4 at the start of the fourth quarter, up slightly from 53.2 in September and broadly in line with the earlier released 'flash' estimate of 53.3. The latest improvement in operating conditions was solid overall and the fastest since January 2019, marking a further move away from April's nadir.
Contributing to the rise in the headline figure was a quicker upturn in production in October. The rate of output growth accelerated to the sharpest since November 2019. Companies often stated that greater output was driven by stronger client demand and higher new order inflows.
The rate of new order growth picked up once again in October, following a slight slowdown in September. The increase in total sales was attributed to more robust client demand, with some firms noting larger orders being placed. Although domestic demand ticked higher, new export orders fell for the first time since July. The decline was only marginal overall, but was reportedly due to reimposed coronavirus disease 2019 (COVID-19) lockdown restrictions across key export destinations in Europe.
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