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US manufacturing PMI declines to lowest in 12 months

FXStreet (London) - The seasonally adjusted Markit Flash US Manufacturing Purchasing Managers’ Index declined from 53.9 in December to 53.7 in January, the lowest reading for 12 months.

According to Markit, lower new business growth was a key factor weighing on the overall performance of the U.S. manufacturing sector in January. Volumes of new work have increased in each month since September 2009, but the latest upturn was the weakest for a year and slightly slower than the average seen during the current period of expansion. Reports from survey respondents suggested that improving domestic economic conditions continued to boost new order levels, but overall export demand remained lacklustre.

Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said: “Business conditions continued to improve among US factories at the start of the year, though the rate of growth continued to cool from the scorching pace seen in the summer months. The slowdown is being led by a weakening inflow of new orders, but the good news is that demand remained strong enough to drive yet another month of robust job creation at factories.

“Producers are also benefitting from the recent oil price slide, which helped reduce overall input costs for the first time for two-and-a half years. The ongoing growth of output and employment signalled by the survey suggest that the process of gradually raising interest rates to more normal levels could be underway by mid-year. However, lower manufacturing costs resulting from the recent oil price rout should drive inflation down further in coming months, providing policymakers with greater leeway to ensure the process of tightening policy is very gradual, keeping interest rates low for longer.”

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