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New U.S. manufacturing orders expand at quickest pace since September 2014

Staff Writer | January 24, 2017
The U.S. manufacturing sector had a solid start to 2017, with overall operating conditions improving at the quickest pace for nearly two years.
Manufacturing orders
America   Markit Flash U.S. Manufacturing PMI
This was shown by the seasonally Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) posting 55.1 in January, up from 54.3 in December, to signal a marked upturn in the health of the sector that was the strongest since March 2015.

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

At the same time, companies raised their purchasing activity at the steepest rate since early 2015 and increased their payrolls further in order to meet greater production requirements.

Positive expectations around the demand outlook were highlighted by further increases in stocks of purchased items and finished goods, with the latter increasing at the quickest pace since the series began in early 2007.

Optimism around the 12-month outlook for production also improved at the start of the year, and reached its highest level since March 2016. U.S. manufacturers reported increased production for the eighth month running in January.

Furthermore, the rate of expansion picked up to its sharpest since March 2015. Higher output was overwhelmingly linked by respondents to greater inflows of new work, with latest data showing the steepest increase in total new orders for 28 months.

However, the upturn in new business appeared to be led by stronger domestic demand, as new export work rose only slightly at the start of 2017, as has been the case in each of the past four months.

Manufacturing employment continued to increase in January as firms looked to increase their capacity.

Though solid overall, the rate of job creation eased slightly from the 18-month high seen in December. Nonetheless, a robust and accelerated upturn in new orders led to a further accumulation of work-inhand (but not yet completed).