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Manufacturing Index Predicts Weak Quarter

Oct. 24, 2012

A flash estimate of U.S. business activity in the manufacturing sector showed a weak start to the fourth quarter, a research firm said.

The Purchasing Managers Index for U.S. manufacturing rose from September's level of 51.1 to 51.3, Markit Economics said.

However, while numbers above 50 indicate growth, the marginal gain comes after a three-year low in the index that is based on 85 percent of the data that is expected.

As such, Markit called the improvement "modest." Overall, numbers show "weak manufacturing growth signaled at the start of the fourth quarter," Markit said.

The break even point between growth and contraction is 50 in the index. However, the critical index for new orders showed slower expansion in that measure with the new orders index sliding from 52.3 to 51.6.

Markit said the output index, a measure of production, rose from 50.6 to 51.5, showing faster growth. The employment index also rose slightly, climbing from 51.9 to 52.1.

"While the consumer side of the U.S. economy appears to be finding a new lease of life, most likely providing the main impetus behind ongoing economic growth in the second half of the year, the manufacturing sector is currently acting as a drag in terms of both economic growth and the labor market," said Markit Senior Economist Chris Williamson in a statement.

"Comparisons of the PMI numbers against official data suggest that the survey results are consistent with mild downturns in both manufacturing output and payroll numbers," he said.

Source: Copyright United Press International 2012

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