Markit: "Big Freeze" Cools January Manufacturing Growth
The Markit Flash U.S. Manufacturing Purchasing Managers' Index (PMI) fell 2.4% to 53.7 for January, its slowest growth in three months, according to a Markit report (link opens as PDF) released today.
The "flash" estimate is typically based on approximately 85% to 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 denotes general growth, while below 50 signals contraction.
According to Markit, January's production isn't necessarily indicative of any larger trends, as output was hindered in some areas by the "big freeze." According to Markit, "extreme weather [led] to sharpest lengthening of suppliers' delivery times since August 2008." Analysts had expected growth to clock in slightly higher at 55.
Diving deeper into components, output dropped from 57.5 to 53.4 for its lowest rating in three months. Employment and new-orders growth slowed down, while new export orders and work backlogs switched from December growth to contraction so far for January.
"The flash PMI indicates that the manufacturing sector continued to grow at the start of 2014, and that the underlying trend most likely remained reassuringly robust," said Markit chief economist Chris Williamson in a statement today. "After allowing for companies that saw production and sales disrupted by the cold weather, the rate of growth of output and orders remained as strong, if not stronger, than seen late last year. Output looks to be growing at an underlying rate of 2% per quarter, which is generating ongoing robust job creation of around 10,000 per month."
Williamson added that any worries from December's payroll dip seem to have disappeared with current indications of a "firmer long-term trend."
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