US manufacturing sector picks up pace in October

Markit’s manufacturing purchasing managers’ index rose from 54 in September to 54.1 last month, slightly above the flash reading of 54 that was initially reported.

The increase in the headline index was driven by an expansion in new orders and output, both of which grew at their fastest pace since March, while new export sales grew at a more subdued pace in the period, as the strength of the US dollar remained a headwind to growth.

However, the latest increase in new work from abroad marked the fastest gain since September 2014 and the third increase in the last four months.

Greater workloads placed pressure on operating capacity and contributed to another accumulation of unfinished work across the manufacturing sector in October, Markit added.

This in turn contributed to a rebound in employment growth from the 27-month low recorded during September, although manufacturers remained relatively cautious in terms of inventories of finished goods.

“Stronger manufacturing growth in October brings encouraging news after the sector saw the pace of expansion slump to a two-year low in the third quarter,” said Markit’s chief economist Chris Williamson.

“With the Fed eagerly watching the data flow to see whether the third quarter economic slowdown will intensify, the improvement in the manufacturing sector increases the odds of policymakers voting to hike rates at the FOMC’s December meeting.”