US manufacturing activity rebounds to 5-month high
US factory activity hit a five-month high in September amid gains in output and new orders, a survey of executives showed, rebounding after data initially signalled an August contraction.IHS Markit’s purchasing managers’ index for the manufacturing sector rose to an initial reading of 51 this month, the strongest mark since April and higher than an upwardly revised 50.3 in August. The survey also surpassed expectations for a September reading of 50.3, according to Thomson Reuters.The result comes amid concerns over American manufacturing growth, after downbeat surveys last month reignited fears over the economic fallout from the US-China trade dispute. IHS Markit’s first reading for August resulted in the first contraction in a decade, with the index sinking to 49.9 before the upward revision Monday. The more closely followed Institute for Supply Management manufacturing index also saw a contraction in August, at 49.1. It was the first time the ISM survey dipped below 50 since August 2016.IHS Markit said its September survey indicated a modest improvement in business conditions, as stronger rates of output and new order growth and an upturn in staffing levels boosted the index. However, manufacturers remained cautious, as seen in a further reduction in purchasing activity.Prospects look “gloomy”, according to Chris Williamson, chief business economist at IHS Markit. He cited inflows of new business, which were down to their lowest level since 2009, and companies’ expectations of growth over the coming year, which were “stuck at one of the most subdued levels since 2012”.“Key to the recent deterioration has been a further spillover of the trade led slowdown in manufacturing to the service sector,” Mr Williamson said.He added: “A ray of light comes from manufacturing reporting some easing of headwinds, though factory conditions likewise remained among the toughest since 2009 to underscore the broad-based nature of the current lassitude.”US stocks were down 0.1 per cent in morning trading in New York. The dollar index, which measures the greenback against global currencies, rose 0.2 per cent.