Markit's flash US manufacturing PMI beat expectations

Markit’s US manufacturing purchasing managers’ index improved more than expected in January.

The flash PMI rose to 55.1 from 54.3 in December, marking the strongest level since March 2015 and beating analysts’ expectations for a reading of 54.5. A reading above 50 indicates expansion, while a reading below signals contraction.

The improvement in business conditions was driven by sharper increases in output and new orders, which rose at the fastest rates in 22 and 28 months, respectively.

Chris Williamson, chief business economist at IHS Markit, said: “US manufacturers are seeing a bumper start to 2017, with production surging higher in January on the back of rising inflows of new orders. New work is growing at the fastest rate for over two years, thanks mainly to rising demand from customers in the home market. Export growth remains subdued, stymied by the strong dollar.

“The survey results suggest that faster manufacturing growth and inventory rebuilding should help boost GDP in the first quarter if current trends persist in coming months. Rising factory employment should also help improve consumer morale and spending. However, with such strong growth being signalled and price pressures rising, speculation around the next Fed rate hike will intensify.”