Despite lackluster ‘hard’ data (IP only helped by cold-weather-juiced Utility surge), ‘soft’ survey data post-Trump continues to shine as US Manufacturing PMI soared in December to 55.1 – the highest since March 2015 (and notably better than preliminary values and expectations). Despite the steepest increase in new orders in 28 months, export orders were stagnant and employment slipped.
Manufacturing employment continued to increase in January as firms looked to increase their capacity. Though solid overall, the rate of job creation eased slightly from the 18-month high seen in December.
The rate of input price inflation accelerated for the second month in a row in January amid reports of higher raw material costs. Moreover, the latest increase in cost burdens was the sharpest seen in 28 months. As a result, companies raised their selling prices for the fourth successive month, albeit at a moderate pace that was similar to that seen in December.
Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“US manufacturers are seeing a bumper start to 2017, with production surging higher in January on the back of rising inflows of new orders.
“New work is growing at the fastest rate for over two years, thanks mainly to rising demand from customers in the home market. Export growth remains subdued, stymied by the strong dollar.
“The survey results suggest that faster manufacturing growth and inventory rebuilding should help boost GDP in the first quarter if current trends persist in coming months. Rising factory employment should also help improve consumer morale and spending.
“However, with such strong growth being signalled and price pressures rising, speculation around the next Fed rate hike will intensify.”
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