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Manufacturing PMI points to strongest improvement in overall business conditions since May 2010

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June survey data highlighted strong input price inflation across the manufacturing sector. The latest rise in average cost burdens was the fastest since January. Anecdotal evidence cited higher prices for a range of raw materials, especially metals. Meanwhile, factory gate price inflation picked up for the first time in 2014 to date. That said, the latest rise in manufacturers’ output charges was only moderate and remained weaker than the long-run series average.

“US industry is booming again."

Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit, said  “US industry is booming again, with the flash manufacturing PMI hitting its highest for just over four years in June. The strong reading also rounds off the best quarter for factories for four years, adding to indications that the US economy rebounded strongly in the second quarter from the weather-related weakness seen at the start of the year. 

“The survey data suggest that GDP should be set to rise by at least 3.0% after the 1.0% decline in the first quarter. 

“If there’s a weak spot it’s the near-stagnation of exports, which raises the possibility that trade will have acted as a drag on the economy in the second quarter.

“Hiring also continued at a robust pace as firms boosted capacity in line with the strong demand, broadly consistent with factories taking on another 12,000 staff during the month. The job markets gains will fuel hopes that we will see yet another month of approximately 200,000 non-farm payroll growth in June.”

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