US Manufacturing PMI Revised Lower: Markit

The IHS Markit US Manufacturing PMI was revised slightly down to 55.3 from a preliminary of 55.4 in November of 2018 and 55.7 in October. However, the reading indicated a solid improvement in the health of the sector that was above the series trend as new orders rose the most since May and job creation was also stronger. On the other hand, business confidence was the lowest since September of 2017 amid concerns over the sustainability of the current sequence of new order growth.
Markit | Joana Taborda | 12/3/2018 3:01:29 PM
Production continued to increase in November. The rise in output was solid overall, albeit the joint-slowest in over a year. Nonetheless, panellists commonly reported on more favourable demand conditions.

Conversely, new orders increased at a sharp and accelerated pace in November. The rise in new business was the quickest since May and was often linked to increased client demand and new product launches. Foreign demand also picked up, with new export orders expanding at the fastest pace for nine months. 

Firms registered a further rise in employment in November, with many noting that greater production requirements had prompted them to hire additional workers. The rate of job creation was sharp and the second-fastest in the year-to-date. Nonetheless, panellists reportedly struggled to cope with the steep increase in new orders, despite higher staffing levels, as backlogs of work continued to increase. The level of work-in-hand grew at one of the fastest rates in over three years.

In response to higher amounts of new and unfinished work, manufacturing firms registered a strong expansion in buying activity. Input purchases also rose due to concerns of further tariffs and resulting increases in raw material costs. Stockpiling activity was linked to a sharp deterioration in vendor performance, as demand for inputs continued to outstrip supply.

Subsequently, cost burdens faced by goods producers rose further. Although the rate of inflation was slower than those seen earlier in the year, it remained marked. A combination of tariffs and supplier shortages were linked to higher raw material prices. Firms were reportedly able to partly pass greater cost burdens on to clients through higher output charges.

Business confidence dipped to the weakest since September 2017. Although optimism stemmed from stronger demand, some raised concerns surrounding the sustainability of the current sequence of new order growth.

 US Manufacturing PMI Revised Lower: Markit