American Manufacturing Sector Rebounds to 5-month High

The U.S. manufacturing sector appears to be on the rebound.

U.S. manufacturing activity hit a five-month high, according to IHS Markit’s Purchasing Managers’ Index for September. The index, which is based on surveys of executives at manufacturing companies, rose to 51.0, the highest figure since April. In August, the reading was 50.3. All readings above 50 indicate expansion.

New order growth improved in September despite ongoing weakness in export orders. Sluggish global growth led to new export orders to weaken for the fourth month out of the last five.

“A ray of light comes from manufacturing reporting some easing of headwinds, though factory conditions likewise remained among the toughest since 2009 to underscore the broad-based nature of the current lassitude,” Chris Williamson, chief business economist at Markit, said in a statement

The Chicago Fed’s index of national activity also showed a snapback in manufacturing for August. Total industrial production rose 0.6 percent in August after decreasing 0.2 percent in July. The overall economic activity rose to a positive score of 0.1 from August’s negative 0.41, indicating that the economy is accelerating.

Despite the pickup in the Purchasing Managers Index, the outlook is “gloomy,” according to Markit.

“Although picking up slightly, the overall rate of growth in September remained among the weakest since 2016, commensurate with GDP rising in the third quarter at a subdued annualized rate of approximately 1.5 percent,” Williamson said. “Prospects also look gloomy, with inflows of new business down to the lowest since 2009 and firms’ expectations of growth over the coming year stuck at one of the most subdued levels since 2012.”