US manufacturing sector kicks 2018 off in style - IHS Markit
Activity in the US manufacturing sector unexpectedly improved in January, according to preliminary figures out on Wednesday.
IHS Markit's flash manufacturing index printed at 55.5 this month, up from 55.1 in December and pointing to the sharpest improvement in manufacturing business conditions since March 2015. Economists had been expecting the index to slip to 55.0.
Meanwhile, the flash services business activity index fell to 53.3 from 53.7 in December, hitting a nine-month low and missing expectations for a nudge up to 54.0.
The composite output index - which measures activity in both sectors - declined to 53.8 in January from 54.1 the month before, hitting an eight-month low but coming in above expectations for a reading of 53.5.
Chris Williamson, chief business economist at IHS Markit, said: "January saw an encouraging start to the year for the US economy. Business activity across the manufacturing and service sectors continued to expand, driving further job gains as companies expanded capacity. Manufacturing is faring especially well, in part thanks to the weaker dollar, providing an important spur to the economy at the start of the year.
"Although the overall pace of economic growth signalled by the surveys waned to an eight-month low, the forward-looking indicators suggest the slowdown will prove transitory. In particular, business optimism about the year ahead improved markedly and inflows of new orders hit a five-month high. Growth should therefore pick up again in coming months."
Dennis de Jong, managing director at UFX.com, said: "Today’s upbeat manufacturing reading marks a very positive start to 2018 for the sector and that could help stem the losses being suffered by the dollar this week.
"Manufacturing in the world’s largest economy is going to be under the microscope in the coming months, with President Trump’s 'America First' trade policy now featuring newly approved tariffs on solar panels and washing machine imports.
"Trump’s stance could spell good news for US employment, and it would be no surprise to see the manufacturing sector continue to expand as we go further into 2018 - though it remains to be seen how well the US will perform as it begins to put barriers up to global trade."