Driven in part by new orders, U.S. manufacturing output growth accelerated in January at the second-fastest rate in almost six years, according to the IHS Markit Flash U.S. Manufacturing Purchasing Managers’ Index.
The index posted a reading of 59.1 in the first half of January, up from 57.1 in December, and is at a series record high. This month’s reading was well ahead of economists’ forecasts, which called for a reading of 56.5. A figure above 50 suggests expansion.
Business optimism about the year ahead surged as manufacturing firms indicated the sharpest improvement in operating conditions on record.
New orders rose sharply because of demand from new and existing customers, while supply chain delays, raw material shortages and evidence of stockpiling at goods producers led to an increase in input prices, according to the report.
This marks the eighth straight month of expansion, and manufacturers indicated greater confidence in the outlook for output. While the COVID-19 virus still poses potential headwinds, we continue to see a particularly fast rebound in China’s manufacturing sector, and we expect the recent momentum in the U.S. manufacturing sector to continue.
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