Great news... Markit's US Manufacturing PMI (flash) for June beat expectations, rising to 51.4 from 50.7, driven by the fastest rise in exports since Sept 2014 (cough weaker dollar cough) as Input costs rose by the most in 18 months. Small bounces in production and employment do nothing to dismiss the "worrying weak" domestic demand picture; and, as Markit warns, "the three months to June has seen the worst quarter for manufacturing in terms of both production and employment growth since 2009."
"Off the lows"?
The latest increase in new business was the strongest since March, although subdued in comparison to the post-crisis average. New orders from abroad expanded at the fastest pace for almost two years, suggesting an additional boost to growth from greater export sales in June. Despite stronger new business growth, a number of manufacturers noted that heightened economic uncertainty had led to delayed decision making and greater risk aversion among clients in June.
Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said:
“The flash PMI for June brought welcome news of improved performance of manufacturing, but the sector still looks to have acted as a drag on the economy in the second quarter, leaving the economy reliant on the service sector and consumers in particular to drive growth.
“Any improvement could be largely traced to better export sales, in turn linked to the weakening of the dollar compared to earlier in the year. Domestic demand was again worryingly weak, especially from business customers, meaning overall growth of order books remained subdued.
”It’s encouraging to see the employment trend reviving somewhat, though factories are clearly remaining cost conscious and keeping workforces lean in order to seek productivity improvements.
“Despite the improvement in the current month, the three months to June has seen the worst quarter for manufacturing in terms of both production and employment growth since 2009.”