U.S. PMI at 10-Month High

The output, new orders, new orders, new export orders and employment subindexes were all expanding in January, and at a faster rate than in December. Oddly perhaps, the backlogs of work contracted from 50.3 in December to 49.5 in January, and the stocks of finished goods continued to show contraction even though the rate improved from 48.7 to 49.6. Another positive sign was the expansion in manufacturers’ purchases, which rose from an index reading of 49.8 to 51.5

The employment index of 55.6 (up from 54.5 in December) is the strongest in nine months. Markit’s chief economist said:

The U.S. manufacturing sector started 2013 on a strong footing, reporting the fastest pace of expansion for nearly two years. Output and new orders both grew at sharply faster rates, encouraging increasing numbers of manufacturers to take on extra staff. … Global economic growth is reviving …. However, it is the domestic market that is clearly providing the main impetus to the upturn, linked to improved confidence in the future given more aggressive stimulus from the Fed and reduced fears about the fiscal cliff.

Markit Economics reported eurozone and Chinese flash PMI readings earlier this morning.