The IHS Markit US Manufacturing PMI was confirmed at 54.9 in January of 2019, the same as in the preliminary estimate and higher than 53.8 in December. Output increased faster and domestic demand drove new business growth as new export orders rose only marginally. Job creation also accelerated and input cost inflation eased. Finally, business confidence about the year ahead reached the highest in three months.
Supporting the higher PMI reading was a sharp and quicker expansion in production across the manufacturing sector in January. The rise in output was the fastest since last September and stronger than the series trend. Output growth reportedly stemmed from greater client demand and efforts to clear backlogs.
Similarly, the upturn in new orders accelerated and was steep overall. The latest rise in new business extended the trend seen throughout the series history. Anecdotal evidence suggested that new client acquisitions and more favourable domestic demand conditions drove the increase.
Furthermore, the rate of new export order growth softened in January. The pace of expansion was the slowest since last October and only marginal overall.
In line with greater production requirements, manufacturing firms expanded their workforce numbers at a solid rate, with growth picking up from December's recent low. At the same time, surveyed companies also registered a modest rise in backlogs of work.
Meanwhile, upward price pressures across the manufacturing sector remained marked in January. Panellists continued to note that increased input costs were due to tariffs on steel and aluminium, alongside greater demand for inputs. That said, the rate of cost inflation was the slowest for one year, aided by the feeding through of lower oil prices. Manufacturing firms were able to take advantage of increased client demand and raised their factory gate charges at a faster rate.
Higher production requirements led to a further rise in buying activity, with many respondents also noting a greater need to stockpile for future output.
Finally, business confidence picked up among manufacturers. Panellists stated that positive sentiment stemmed from new client acquisitions and expectations of firmer demand conditions. The degree of optimism was the second-highest
since last May.
2/1/2019 2:54:43 PM