US Manufacturing PMI Revised Down: Markit

The IHS Markit US Manufacturing PMI edged down to 55.3 in July of 2018 from a preliminary of 55.5 and 55.4 in June. The reading pointed to the slowest expansion in factory activity in five months amid weaker rises in output and employment and higher inflationary pressures while export sales fell for the second month in a row.
Markit | Joana Taborda | 8/1/2018 1:52:38 PM
Production continued to rise across the U.S. manufacturing sector in July, extending the current sequence of growth that began in June 2016. Where an increase in output was reported, panellists linked this to greater client demand and larger new order volumes. Although the rate of expansion was strong overall, it was the slowest since November 2017. 

New order growth, however, continued to outstrip that of output. The latest upturn in new business matched that seen in June and was strong overall. Anecdotal evidence suggested the rise was due to the acquisition of new clients and favourable demand conditions. That said, growth was largely driven by the domestic market, with foreign demand falling fractionally for the second successive month.

In line with a sustained upturn in new orders, backlogs continued to rise solidly in July. On the employment front, panellists commonly reported difficulties filling current vacancies, with the rate of job creation softening despite increased pressure on production capacities. 

Pressure on supplier chains also intensified, as highlighted by delivery times lengthening to the greatest extent since the series began. Increased demand for inputs was exacerbated by firms reportedly stockpiling raw materials. Moreover, the rate of input price inflation accelerated to the thirdfastest since March 2012 and was sharp overall. Firms also commented on efforts to pass costs onto clients through higher prices, with the rate of charge inflation accelerating to the fastest since June 2011. However, some stated that competition between firms weighed on overall pricing power.

Difficulties in sourcing raw materials also fed through to a weaker rise in purchasing activity. That said, signs of stockpiling were evident in a faster increase in pre-production inventories, which rose at the quickest pace since January. Finally, expectations regarding the outlook for output over the next year improved in July. Confidence was largely attributed to new product developments and more favourable demand conditions.  

US Manufacturing PMI Revised Down: Markit