US manufacturing PMI beats expectations in October

The US manufacturing sector rebounded strongly in October reaching a five-month high, according to data released on Friday.

The Markit flash US manufacturing Purchasing Managers’ Index rose from 53.1 in September to 54 in October, comfortably above the 52.9 reading analysts had expected.

October data indicated a robust and accelerated expansion of production levels across the manufacturing sector, the report added.

The latest rise in output was the fastest since March, which brought the pace of expansion back in line with the post-crisis average.

“There has been brighter economic data coming out of the United States recently, but still nothing to indicate real economic strength,” said Dennis de Jong, managing director at UFX.com.

“Oil prices are on the rise, although the strength of the dollar looks likely to temper any further gains.

“It all paints a stable, if not overwhelmingly uplifting, picture for Fed Chair Janet Yellen.”

Volumes of new work received by manufacturers expanded at the fastest pace in seven months, while new orders from abroad rose at their quickest pace since February.

However, manufacturers remained cautious in terms of their inventory holdings and input buying during October, leading stocks of finished goods to decline for the third successive month.

“The faster growth of export sales is particularly good news and will help to alleviate fears that the US economy is being hurt by the stronger dollar and slower growth in China,” said Markit’s chief economist Chris Williamson.

“A lightening of the mood in the goods-producing sector was perhaps best reflected in the rebound in job creation, which points to manufacturers having increased confidence that the current upturn will be sustained.”