Research firm Markit Economics reported that the flash U.S. purchasing manager's index (PMI) rose from 54 in December to 56.1 in January, the highest index reading since last March. This is a preliminary reading for January; the final reading will be published on February 1. Readings above 50 indicate expansion relative to the previous month, while readings below 50 indicate contraction.
The output, new orders, new orders, new export orders and employment subindexes were all expanding in January, and at a faster rate than in December. Oddly perhaps, the backlogs of work contracted from 50.3 in December to 49.5 in January, and the stocks of finished goods continued to show contraction even though the rate improved from 48.7 to 49.6. Another positive sign was the expansion in manufacturers' purchases, which rose from an index reading of 49.8 to 51.5
The employment index of 55.6 (up from 54.5 in December) is the strongest in nine months. Markit's chief economist said:
The U.S. manufacturing sector started 2013 on a strong footing, reporting the fastest pace of expansion for nearly two years. Output and new orders both grew at sharply faster rates, encouraging increasing numbers of manufacturers to take on extra staff. … Global economic growth is reviving …. However, it is the domestic market that is clearly providing the main impetus to the upturn, linked to improved confidence in the future given more aggressive stimulus from the Fed and reduced fears about the fiscal cliff.
Markit Economics reported eurozone and Chinese flash PMI readings earlier this morning.
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