US manufacturing PMI signals ongoing growth surge
At 57.5, the final Markit US Manufacturing PMI came in below the earlier flash reading of 57.9, signalling a slightly greater loss of growth momentum in manufacturing compared to August than previously estimated. However, this slowing needs to be put in the context of the rapid pace of growth seen in recent months.
The September PMI reading in fact rounds off the strongest quarter recorded by the survey since the financial crisis, narrowly beating the previous peak seen when the economy was rebounding from recession in the second quarter of 2010.
New order growth also remained strong, encouraging firms to take on extra staff at a rate not seen since early-2012. The labour market upswing clearly bodes well for overall non-farm payroll growth to rise above 200,000 in September, especially given the improved rate of job creation also signalled by the flash services PMI.
Recent months have also seen a welcome revival in export growth, suggesting trade should also help boost the US economy in the third quarter. GDP looks set to grow by at least 3.0% in the third quarter, with good momentum being sustained as we move into the final quarter of the year.
Policymakers will be cheered by the strong economic performance in September, especially as it suggests that the economy has shown resilience to the prospect of quantitative easing ending in October. However, the Fed will also be worried by price pressures picking up to a post-crisis high, which suggest that calls for interest rates to start rising sooner may grow louder.
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Chris Williamson | Chief Business Economist, IHS Markit
Tel: +44 20 7260 2329
chris.williamson@ihsmarkit.com