Please ensure Javascript is enabled for purposes of website accessibility

Markit: U.S. Manufacturing Growth Slows to 3-Month Low

By Justin Loiseau - Feb 3, 2014 at 12:34PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

New orders taper off, but index remains in growth territory.

The Markit U.S. Manufacturing Purchasing Managers' Index (PMI) eased down 2.4% to 53.7 for January, according to a Markit report (link opens a PDF) released today. That's the lowest reading since October and down from an 11-month high of 55.0 in December. 

An above-50 reading denotes positive change from the previous month, putting this month's report in growth territory once again, despite smaller gains. Analysts had expected a slight slowing, however, and their 53.9 estimate was essentially spot-on. 

This month's flash index estimate clocked in at 53.7 two weeks ago, when Markit analysts pointed to wintry weather as part of the reason for the index's decline. 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.

On a component-by-component basis, things certainly aren't as sunny as December's 11-month high. The all-important new orders component fell 4 points to 53.5, while export orders slipped into contraction with a 3-point drop to 48.4. Backlogs of work also shrank, down 3.6 points to 49.2. As a sign of some longer-term stability, the employment component remained solid, dipping just 0.8 points to 53.2. 

Chief economist Chris Williamson was quoted as saying:

Survey respondents reported the weakest growth of output and new orders for three months in January, but with many companies blaming exceptionally cold weather for production and supply chain disruptions, the underlying trend looks to have remained robust. The ongoing expansion suggests that the goods producing sector is on course to contribute to another quarter of solid economic growth in the first quarter, and is also helping sustain a decent rate of job creation. The survey is broadly consistent with 10,000 jobs being created per month in the manufacturing sector which, added to the signal from the flash services PMI, points to non-farm payroll growth in the region of 200,000 in January. The improvement supports the view that the economy is withstanding the ongoing tapering by the Fed. However, it will be important to see the indices bounce back from January's weather-related weakness to be sure of this resilience.


Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.