Economic Watch: September Manufacturing, Leading Indicators Improve
A first-look at how the manufacturing economy is performing this month shows conditions have improved to a two-month high, while a separate report indicates the overall economy improved again in August as the outlook calls for continued growth through the second half of the year.
Manufacturing business conditions continued to improve at a relatively subdued pace in September, according to the preliminary Flash U.S. Manufacturing Purchasing Managers' Index from the financial information services provider IHS Markit.
At 53.0, up fractionally from 52.8 in August, the gauge remained weaker than its post-financial crisis trend of 53.9. September data indicated that output volumes increased at a moderate pace that was unchanged from August's 14-month low.
Some manufacturers noted that Hurricane Harvey had led to temporary disruptions to production at their plants. However, there were also signs of underlying fragility in September, with new orders expanding at one of the slowest rates seen over the past year. The latest data also indicated that new export sales remain close to stagnation.
Backlogs of work increased for the second month running in September, which encouraged some firms to boost their payroll numbers. The rate of employment growth was the fastest so far in 2017.
Historical comparisons of the PMI with the U.S. gross domestic product point to the economy growing at an annualized rate of just over 2% in the third quarter, according to Chris Williamson, chief business economist at IHS Markit. That compares to a 3% annual rate in the second quarter of the year.
“The biggest impact of Hurricane Harvey was evident in manufacturing supply chains, where resultant supply shortages were a key driver of higher prices,” he said. “The manufacturing sector, which was already struggling in August, consequently acted as an increasing drag on the economy, leaving services as the main growth driver. The survey is consistent with ...Read the rest of this story
