Expert from Markit comments on US flash manufacturing PMI
Chris Williamson, expert at Markit comments on the US manufacturing PMI.
“US manufacturing remained stuck in crawler gear in September, fighting an uphill battle against the stronger dollar, slumping demand in many export markets and reduced capital spending, especially in the energy sector.
“The sluggish growth, weaker forward-looking indicators and downturn in price pressures all point to the Fed holding off with rate hikes until next year.
“At 53.0 and unchanged on August, the headline flash Markit Manufacturing PMI came in exactly in line with expectations. However, the survey is indicating the weakest manufacturing growth for almost two years, meaning the sector will have acted as a drag on the economy in the third quarter. As such, GDP growth is likely to have slowed from 3.7% in the second quarter to 2.5% at best in the three months to September.
“Export orders barely grew in volume terms during the month, albeit rose at the fastest rate since February. Producers struggled again the stronger dollar and weak growth in key export markets, especially previously-fast growing emerging markets such as China.
“Inflows of work rose at the slowest pace since the start of 2014 as weak domestic demand added to the lacklustre export performance..
The survey also showed that job creation has slowed, with the PMI’s sub-index consistent with the official measure of factory non-farm payrolls dropping by around 10,000 in September. The latest reading was one of the lowest seen since the financial crisis and reflected an increasingly cautious approach to hiring as companies focus on protecting profit margins in the face of the strong dollar and weak sales.
“Average goods prices fell in September for the first time since August 2012, adding further to evidence that supports the Fed holding off with any rate hikes. Price falls reflected intense competition amid weak demand, as well as the pass-through of lower commodity prices, especially oil.”