Growth in US manufacturing picks up amid bid to rebuild after Sandy
US manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand suggesting factories could provide a boost to economic growth in the fourth quarter.
Other data yesterday showed a drop in new claims for jobless benefits, although they remained elevated due to superstorm Sandy, and only a marginal improvement in consumer sentiment.
Financial information firm Markit said its US "flash," or preliminary, manufacturing Purchasing Managers Index rose to 52.4 from a three-year low of 51.0 in October. Above 50 indicates expansion.
Output in the factory sector and domestic new orders also grew at their fastest pace since June, while the pace of hiring in the factory sector was the swiftest in four months.
Some respondents said efforts to rebuild after Superstorm Sandy may have accounted for some of the increased demand.
The data gives a positive signal for economic growth in the last three months of the year, although Sandy continues to make it more difficult to read the health of the economy.
"Stripping out the short-term boost from Sandy, however, and output is probably flat," said Paul Dales, an economist with Capital Economics in London.
"That's unlikely to change much when the global econ- omy is set to remain weak," he said.
Separately, the Labour Department said initial claims for state unemployment benefits dropped 41,000 to a seasonally adjusted 410,000.
That was in line with the median forecast in a Reuters poll.
Despite the drop, the level of claims remained elevated due to Sandy. That will likely prove temporary, although economists thought the data nevertheless pointed to a struggling jobs market.
"There appears to be a noticeable deceleration of growth in the fourth quarter," said Peter Hooper, an economist at Deutsche Bank in New York. "It would not be surprising if some of the new jobless claims are due to underlying weakness," he said.
US financial markets showed little reaction to the data as investors focused on developments in Europe and trading slowed ahead of the Thanksgiving holiday today.
US stocks rose, while Treasury debt prices were down modestly. (Reuters)