US manufacturing to eke out small gains

US manufacturing output grew by 0.5% mom in February and then 0.4% mom during March, making good all of the fall of 0.8% in January. Perhaps then one should not be too surprised to find that the survey evidence on the manufacturing sector seems to have turned a little bit less optimistic in April. That is, the growth in February and March exaggerated the underlying trend so maybe the weaker April surveys are just showing a reversion to trend.

The April surveys show the export sector is in the doldrums, even though there are more signs of life in the euro area recovery. Even more surprising is the lack of buoyancy in domestic orders which runs contrary to the continuing momentum in overall economic activity that is signalled by the broad range of survey data. The overall business climate is strong enough to generate growth of 0.2% mom in manufacturing output in April, says Societe Generale.