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Updated: U.S. Flash PMI Falls To 53.7 In January

By Kitco News
Friday January 23, 2015 9:45 AM

Editor's Note: The article was updated to include more information from the report.

(Kitco News) - The U.S. manufacturing sector continues to lose momentum in January, adding to softer numbers in December, according to the latest Purchasing Managers Index data.

Friday, private research firm Markit said its January flash estimate PMI fell to a level of 53.7, compared to December’s final reading of 53.9. According to consensus reports, economists were expecting to see a small rise to 54.1. The report said that January's report was slowest rate of expansion in 12 months.

A reading above 50.0 signals an improvement in business conditions, while readings below 50.0 signal deterioration. 

The report added that the decline in the headline data was the result of slower new business growth. The new orders index fell to 54.7, compared to December’s reading of 55.4.

“Volumes of new work have increased in each month since September 2009, but the latest upturn was the weakest for a year and slightly slower than the average seen during the current period of expansion,” the report said.

Although the growth rate hit a one-year low, Chris Williamson, chief economist at Markit, said there are still reasons to be optimistic about the strength of the U.S. economy.

“The slowdown is being led by a weakening inflow of new orders, but the good news is that demand remained strong enough to drive yet another month of robust job creation at factories,” he said. “Producers are also benefitting from the recent oil price slide, which helped reduce overall input costs for the first time for two-and-a-half years.”

On the employment front, Markit said that payrolls numbers increased in January, extending the current labor market expansion to 19 months.

“Greater levels of staff hiring were linked to expectations of rising workloads and improved profitability in the months ahead,” the report said.

The research firm also noted a strong decline in price pressures as manufacturing costs declined for the first time in 2-and-a-half years. The report added the cline in costs was linked mainly to the fall in oil prices.

This is the first glimpse markets will have to be able to gauge the health of the national manufacturing sector. Last week, the New York Federal Reserve and the Philadelphia Federal Reserve had opposing outlooks for their regional manufacturing sectors.

The New York Fed said its Empire State manufacturing survey climbed to a reading of 10.0 in January, up from negative 3.6 reported in December.  However, on the same day, the Philly Fed said its manufacturing business outlook survey fell to 6.3 in January, down from December’s revised reading of 24.3.

By Neils Christensen of Kitco News; nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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