Manufacturing Growth Hits New 12-Month Low
The Markit Flash U.S. Manufacturing Purchasing Managers' Index (PMI) fell 3.2% to 51.1 for October, according to a Markit report (link opens as pdf) released today .
The "flash" estimate is typically based on approximately 85%-90% of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data. An above-50 reading indicates general growth, while below 50 signals contraction.
Although October manufacturing kept above the 50 level, this month's report is the lowest reading in a year, and is "consistent with only a modest rate of expansion," according to Markit. Analysts were disappointed by the news, having expected a slight 0.1 point decrease from September's 52.8 report.
In a sign of potential trouble ahead, the index's new orders component fell 1.6 points to 51.6, although new export orders reversed its trend, moving from 49.0 to 50.7.
Coinciding with today's jobless claims report, the index's employment component managed a one-point increase to 52.3.
"The flash PMI provides the first insight into how business fared against the backdrop of the government shutdown in October, and suggests that the disruptions and uncertainty caused by the crisis hit companies hard. The survey showed the first fall in manufacturing output since the height of the global financial crisis back in September 2009," said Markit Chief Economist Chris Williamson in a statement today. "We can expect GDP growth to have suffered a set-back in the fourth quarter, but it is too early to estimate the extent of the slowdown. It is impossible to disentangle the impact of the shutdown from other factors that might have been at play during the month, so equally impossible to judge the extent to which business might bounce back in November."
Williamson also added that market uncertainty should keep any action from the Federal Reserve at bay until economic data return to steady states, which could take until the end of this year.
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