The United States has shown further signs that its economy is improving after posting a modest rise in Markit’s Flash Manufacturing Purchasing Managers Index.
Markit said the Index edged up to 51.3 in October, up from a three-year low of 51.1 in September. Readings above 50 indicate expansion. New orders slowed and prices for materials hit the highest level in six months, Markit said. Earlier, Markit reported that the euro-zone flash manufacturing PMI fell to 45.8 in October from 46.1 in September, the lowest level in 40 months. Yet the HSBC Markit flash China manufacturing PMI climbed to 49.1 from 47.9 in September, marking a three-month high.
Markit’s chief economist Chris Williamson cautioned that it won’t be plain sailing for the US’s tentative recovery with manufacturing acting as a weight on the nation’s economy. The economy faced fewer orders from domestic clients and saw a fifth straight monthly decline in overseas demand for US goods.
“Purchasing managers’ report that the key to the ongoing weakness remains uncertainty among customers in export markets, notably Europe and Asia,” he said.
“However, demand at home remains subdued, possibly reflecting clouds hanging over the economic outlook due to the upcoming elections and worries about fiscal policy.”
The data will be of some comfort to President Barack Obama as e continues to fight for votes ahead of the November 6th Presidential election. A worse than expected set of figures would see his opponent Mitt Romney gain another avenue of attack on the subject of the US economy. The country faces looming changes to US fiscal policy after the elections. More than $600 billion in federal spending cuts and tax hikes are all set to begin in January unless congress chooses to halt the action.
The US figures added to an improved sense that the global economy is on the right track to recovery after China posted an improved PMI of its own. The preliminary reading was 49.1 for a China purchasing managers’ index by HSBC Holdings Plc and Markit, compared with a final level of 47.9 last month.
As of 15:20 pm
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