Markit's flash US manufacturing PMI drops more than expected

Activity in the US manufacturing sector deteriorated more than expected in August, according to data released on Tuesday.

Markit’s flash US manufacturing purchasing managers’ index fell to 52.1 in August from a nine-month high of 52.9 in July.

Economists had been expecting a less steep decline to 52.7. A reading above 50 indicates expansion.

Although the PMI has now pointed to improving business conditions in each month since October 2009, August’s reading pointed to a moderate rate of improvement that was weaker than the post-crisis average.

Chris Williamson, chief business economist at IHS Markit, said: “The August drop in the PMI is a disappointment but less worrying when looked at in the context of July’s better-than-expected reading. Taking the July and August readings together suggests that manufacturing is enjoying its best growth so far this year in the third quarter, and should help drive stronger GDP growth.

“With August seeing the largest rise in exports for almost two years, the improved trade performance should also help drive faster economic growth.”