U.S. Manufacturing Activity Swings to Expansion in July -- IHS Markit
04 August 2020 - 12:39AM
Dow Jones News
By Maria Martinez
U.S. manufacturing activity improved in July for the first time
since February following the outbreak of Covid-19, data from a
survey of the manufacturing sector compiled by IHS Markit showed
Monday.
The final reading for the U.S. Manufacturing Business Activity
Index for July was 50.9, slightly lower than the flash figure of
51.3 and up from 49.8 registered in June, IHS Markit said.
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.
Overall growth was marginal but stemmed from the first upturns
in output and new orders for five months, as client demand picked
up, IHS Markit said.
The contraction in employment softened despite further evidence
of spare capacity as new sales rose and greater optimism in the
outlook also was reflected in an improvement in business
confidence, the report said.
Input prices rose solidly amid increased demand for inputs,
while firms partially passed on higher costs to clients through an
uptick in charges, IHS Markit said.
Output rose modestly in July, having its first expansion since
February. Firms linked the increase to the resumption of operations
at manufacturers and their clients. Some also noted that demand
also began to rise.
However, Chris Williamson, chief business economist at IHS
Markit said much of the recent improvement in output appears to be
driven merely by factories restarting work rather than reflecting
an upswing in demand.
New orders also increased for the first time since February,
showing modest growth, the report said. However, new export orders
declined slightly.
"Encouragingly, business optimism about the year ahead has
revived to levels last seen in February, but many see the next few
months being a struggle amid the ongoing pandemic, with a more
solid-looking recovery not starting in earnest towards the end of
the year or even into 2021," Mr. Williamson said.
Write to Maria Martinez at maria.martinez@wsj.com
(END) Dow Jones Newswires
August 03, 2020 10:24 ET (14:24 GMT)
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