US manufacturing output growth recovers strongly in July on solid, rapid rise of incoming new work

Manufacturers in the US have hinted at a comparatively strong beginning to this year’s third quarter. Since June, output growth recovered strongly, thanks to solid and rapid growth of incoming new work. The seasonally adjusted Markit final US Manufacturing PMI rose to 52.9 last month from June’s 51.3. This was also above the post-crisis low of 50.7 witnessed in May. The final reading for July was the same as the flash reading. Recovering business conditions showed robust rates of employment, new order and output growth in the July’s survey period.

Last month’s data hinted at a sustained recover in volumes of production throughout the manufacturing sector, noted Markit. In each of the last two months, higher levels of output have been registered with the latest growth the most rapid since November 2015. Anecdotal evidence cited larger inflows of new work and supportive economic conditions, said Markit.

New business growth continued to rebound from the post-crisis low registered in May. Meanwhile, new order books improved the strongest in nine months. In the meantime, sales of exports rose at a modest pace last month. Manufacturers have connected this to successful promotional initiatives and entry into new markets. Increasing workloads have added to the accumulation of unfinished business for the second straight month.

The number of payrolls rose in July, continuing with the upward trend seen in the last three years. Furthermore, the pace of job creation rose to the strongest level since July 2015. According to manufacturers, rapid business growth and the new products’ launch mainly helped in stimulating staff recruitment at their plants. At the same time, increases levels of incoming new work also led to higher volumes of purchasing activity in July.

For the three consecutive months input buying has increased, while the latest rise was the steepest since October 2015. But manufacturers continued to be wary in terms of their inventory holdings. Moreover, manufacturers hinted at a further moderate rise in average cost burdens in July that extended the current period of input price inflation to four months, said Markit.