By Xavier Fontdegloria

 

Manufacturing activity in the U.S. extended its rebound to September, expanding at the fastest pace since early 2019 supported by a rise in production and new orders, data from a survey of the manufacturing sector compiled by IHS Markit showed Thursday.

The final reading for the U.S. Manufacturing Business Activity Index for September was 53.2, down slightly the preliminary figure of 53.5 and broadly in line compared with the 53.1 level registered in August.

Economists polled by The Wall Street Journal expected the indicator to come in at 53.5.

September's reading shows that overall manufacturing activity expanded in the U.S. for the third consecutive month, and that the pace of this expansion steadied in September compared with the prior month.

The U.S. Manufacturing PMI is a weighted average of new orders, output, employment, supplier's delivery times and stocks of purchases. A level above 50 indicates expansion, while a reading below 50 signals contraction. Manufacturing activity didn't expand at the current rate since January 2019, when the PMI stood at 54.9.

Overall growth was supported by a faster expansion in production. The quicker rise in output at the end of the third quarter was the sharpest for 10 months. A number of firms attributed the expansion to a further uptick in new orders and the resumption of operations at clients, the report said.

Firms continued to broaden their workforce numbers, as hiring increased following further upward pressure on capacity, IHS Markit said.

U.S. manufacturers rounded off a solid quarter which should see the sector rebound strongly from the steep second quarter downturn, said Chris Williamson, chief business economist at IHS Markit.

"Encouragingly, companies reported a marked upturn in demand for plant and machinery, which suggests firms are increasing their investment spending again after expansion plans were put on hold during the spring," he said.

Despite the solid expansion registered in September, output expectations moderated in the month amid increased uncertainty regarding the coronavirus disease pandemic and the upcoming presidential election.

"The sector therefore looks to be entering the fourth quarter on a slower growth trajectory, adding to signs that fourth quarter GDP growth will wane considerably from the third quarter rebound," Mr. Williamson said.

 

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

 

(END) Dow Jones Newswires

October 01, 2020 10:16 ET (14:16 GMT)

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