The U.S. manufacturing sector lost momentum in October, according to the latest Purchasing Managers Index data.
Thursday, the private research firm Markit said its October flash estimate PMI fell to a level of 56.2, compared to September’s final reading of 57.5. According to consensus reports, economists were expecting to see a small decline to 57.2.
“Although still comfortably above the neutral 50.0 value, the index was the lowest since July and notably weaker than the average seen during the third quarter as a whole (57.1),” the report said.
The health of the manufacturing sector continues to be questioned as regional data showed mixed results last week. On Oct. 15 the New York Federal Reserve said its Empire State manufacturing survey dropped 21 points, falling to a reading of 6.2, compared to September’s reading of 27.5. However, the Philadelphia Federal Reserve’s manufacturing survey held up slightly better falling to 20.7 from September’s reading of 22.5.
The report said softer new business growth was the biggest drag on the headline numbers, and there was only a “moderate” expansion of new orders. “A number of survey respondents commented on more cautious spending patterns among clients, especially in relation to export sales,” the report said.
On employment, Markit said the data showed a “resilient” manufacturing payrolls trend as the rate of job creation was little changed from September’s two-and-a-half year high.
“The data will no doubt add to the view that policymakers should be in no rush to raise interest rates, with output and order book growth slowing and price pressures easing,” said Chris Williamson, chief economist at Markit. “On the other hand, sustained strong job creation will raise worries that slack continues to be eroded, which could drive up inflation in the medium term.”
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