Manufacturing Strengthens but Small Firms are Still Suffering
Fastest Manufacturing Expansion Since Jan 2019
IHS Markit reports the Manufacturing PMI is expanding at the fastest pace since January of 2019.
Five Key Points
- Overall growth is the strongest since early 2019.
- Faster increases in output and new orders
- Input costs rose sharply amid supplier price hikes and raw material shortages.
- Firms were able to partly pass on higher cost burdens through a modest increase in selling prices.
- Firms indicated a renewed rise in employment for the first time since February. The rate of employment growth was the joint-fastest since March 2019.
Chris Williamson, Markit Chief Business Economist , Comments
- “The manufacturing upturn gained further ground in August, adding to indications that the third quarter should see a strong rebound in production from the steep decline suffered in the second quarter.
- “Encouragingly, new order inflows improved markedly, outpacing production to leave many companies struggling to produce enough goods to meet demand, often due to a lack of operating capacity. Backlogs of uncompleted work consequently rose at the fastest rate since the early months of 2019, encouraging increasing numbers of firms to take on more staff.
- “Key to the upturn was a jump in new export orders, which rose at the fastest rate for four years, reflecting improving demand in many foreign markets, and benefitting larger companies in particular. Disappointingly, new orders and export sales at smaller manufacturers continued to fall, highlighting an unbalanced recovery in favour of larger firms.”
The uneven recovery fueled by cheap money continues.
Coming up, I have a report from ISM that looks a lot different, especially on employment.