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US industry scores biggest gains for almost four years

03 March, 2014

During February, the US manufacturing sector achieved its biggest improvement in business conditions for 45 months, according to the latest Purchasing Managers’ Index. The February PMI was 57.1 – a significant improvement over the January figure of 53.7 – indicating that business has bounced back following a weather-related slowdown in January.

Output and new business both picked up sharply in February as manufacturers started to overcome the disruptions caused by the unusually severe weather in January. Although the bad weather continued into February, manufacturers managed to build up safety stocks which helped them to overcome some of the supply chain problems.

During February, the volume of new work being handled by US manufacturers increased at its sharpest rate since April 2010. The manufacturers surveyed attribute this mainly to rising domestic demand and to confidence about the economic outlook among their customers.

Production grew at its fastest rate since March 2011, while export orders increased marginally. Job creation was at its strongest since March 2013, but backlogs also grew during February.

The PMI data also shows large manufacturers – those with more than 500 employees – were the best performers during the month.

The manufacturing output figures from Markit (blue graph, left axis) and the US Federal Reserve (orange graph, right axis) are tracking each other closely
Sources: Markit, US Federal Reserve

According to Chris Williamson, chief economist at the survey compiler Markit, the February PMI figure “signalled one of the largest monthly improvements in manufacturing for almost four years.

“The upturn pushes the trend over the last three months to the strongest since May 2012,” he adds, “suggesting that the sector maintained robust underlying growth momentum throughout the winter months.”

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