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Survey: US manufacturing stagnating

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Survey: US manufacturing stagnating

Markit Purchasing Manager Index for US hits 12-month low.

The Markit Flash US Purchasing Managers Index (PMI) fell to a twelve-month low in October, coming in at 51.1.  The index was at 52.8 in September.

The latest index is consistent with a very modest rate of expansion.

The main factor behind the lower PMI in October was a drop in manufacturing output, which fell for the first time on over four years.  The decline was small, but contrasted significantly with strong increases in recent months.

"The main factor behind the lower PMI in October was a drop in manufacturing output, which fell for the first time on over four years."

New orders, while increasing in October, grew at the slowest rate in six months, reflecting primarily weaker domestic demand.  Export orders increased marginally, but this merely offset a similar-sized reduction in September.

Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said:

“The flash PMI provides the first insight into how business fared against the backdrop of the government shutdown in October, and suggests that the disruptions and uncertainty caused by the crisis hit companies hard. The survey showed the first fall in manufacturing output since the height of the global financial crisis back in September 2009. We can expect GDP growth to have suffered a set-back in the fourth quarter, but it is too early to

estimate the extent of the slowdown. It is impossible to disentangle the impact of the

shutdown from other factors that might have been at play during the month, so equally impossible to judge the extent to which business might bounce back in November.

“The Fed will be equally unsure of the underlying health of the economy, and will no doubt want to see the economic data stabilise, which could take until the end of the year, before making any firm policy decision.”

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