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Dec Rate Hike Looms: Despite Job Cuts, Survey Collapses, US Manufacturing PMI Surges To May Highs

Having stabilized at 2-year lows in September, October's preliminary US Manufacturing PMI printed 54.0 (smashing expectations of a small drop to 52.7). Despite collapse regional Fed surveys, and widespread job cuts across the manufacturing sector, Markit claims US Manufacturing is the strongest since May. Both output and new orders surged as input costs fell, as Markit notes, despite cycle high inventory levels, today's data "indicated a robust and accelerated expansion of production levels across the manufacturing sector." December rate-hike odds are risisng...

 

 

October data indicated a robust and accelerated expansion of production levels across the manufacturing sector. The latest rise in output was the fastest since March, which brought the pace of expansion back in line with the post-crisis average. Survey respondents mainly cited improving demand from domestic markets and competitive pricing strategies. At the same time, global economic uncertainty and lower energy sector capex were reportedly factors acting as a brake on manufacturing growth in October.

Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said:

“October’s flash PMI survey brought welcome signs of stronger manufacturing growth at the start of the fourth quarter.

 

“The positive start to the fourth quarter suggests the economy may be picking up speed again after slowing in the third quarter, for which the PMI surveys pointed to annualised GDP growth of 2.2%.”

 

“Production growth rebounded in October to the fastest since March, in line with its post-recession average, as order book growth revived amid improved demand from both home and abroad.

 

“However, worries about the dollar’s strength, export weakness and the recent downturn in the energy sector mean that business optimism and employment gains remain weaker than seen earlier in the year.”

Well with great data like this and markets exuberant - theres going to be plenty more strong dollar to worry about soon.

Charts: Bloomberg