Flash Manufacturing PMI Passes Consensus Expectations: Positive Outlook for US Economy

Junes Purchasing Managers Index preliminary data release displays improving economic conditions for businesses influenced by the fastest output and new orders growth in the past four years. Current output improvement since April has lead to all time highest since April 2010.Consensus range for June's PMI release was between 56.0 to 58.4, while the actual came out to the higher side of 57.5, beating the lower range of consensus and the previous months PMI release of 56.2. Total new business volume grew substantially in June, making it the highest point since April 2010 highs. New export order growth released slightly weaker than before, while new business from abroad has increased steadily at its slowest pace in five months. Markit reports in June's PMI release, manufacturing firms have increased payroll due to the rising in production demand from increasing orders. Payroll has been increasing for the past 12 months for similar reasons and unfinished work credited by heavy snow falls around February. The data release displayed inflation within the manufacturing sector through heavy input prices. Raw materials, like metals were highlighted for increased at the fastest pace since January. Factory gate prices also reflected a pickup in inflation, increasing for the first time in 2014. Chief Economist at Markit, Chris Williams commented positively on the release, stating: “US industry is booming again, with the flash manufacturing PMI hitting its highest for just over four years in June. The strong reading also rounds off the best quarter for factories for four years, adding to indications that the US economy rebounded strongly in the second quarter from the weather-related weakness seen at the start of the year.” “Hiring also continued at a robust pace as firms boosted capacity in line with the strong demand, broadly consistent with factories taking on another 12,000 staff during the month. The job markets gains will fuel hopes that we will see yet another month of approximately 200,000 non-farm payroll growth in June.”