US manufacturing PMI falls to three-month low in September

Markit’s final US manufacturing purchasing managers’ index fell to a three-month low of 51.5 in September from 52.0 in August.

Still, this was a touch above the flash estimate of 51.4.

Slower rates of output and new order growth were the main factors weighing on the headline index, which more than offset a stronger contribution from the staff hiring component.

Chris Williamson, chief business economist at IHS Markit, said: “Manufacturing growth slowed to a crawl in September, suggesting the economy is stuck in a soft-patch amid widespread uncertainty in the lead up to the presidential election. The survey saw firms pulling back on expanding production and focusing instead on cost-cutting, as inflows of new business slowed to the weakest seen so far this year.

“Any growth is largely being driven by the consumer, in turn helped by tail-winds of low interest rates, low inflation and a solid labour market. “Business spending, in contrast, is being subdued by the headwinds of uncertainty about the economic outlook, cost-driven inventory reduction and the strong dollar, the latter linked to yet another drop in exports.”

David Morrison, senior market strategist at SpreadCo, said: “Last month the US manufacturing sector contracted for the first time in six months. It was one of the major data releases which led many commentators to doubt that the Fed would hike rates at its September meeting.

“Today’s release has gone some way to countering fears that the US economy isn’t as robust as the FOMC would like us to believe. In that respect, it strengthens the likelihood of a December hike. Later this week we’ll get an update on the services sector with non-farm payrolls wrapping things up on Friday. If the data comes in better-than-expected, then we should see the dollar strengthen further.”