Manufacturing sentiment rose to its best level in ten months as business optimism continued to build following the election of Donald Trump despite the lack of improvement in actual statistics.
The purchasing managers’ index from Markit Economics of London climbed to 55.1 in January from 54.3 in December. This preliminary reading was the highest since March 2015 and was substantially better than the 54.5 consensus estimate.
New orders increased sharply though export bookings were flat and the employment index declined. Manufacturing input prices rose for the second month as did selling prices for U.S. factories for the fourth straight month.
The Markit report seconded the IBD/TIPP Economic Optimism Index for January issued on January 11th which reported its level as unchanged in January at 54.8. This was a substantial gain from the 46.7 and 51.3 scores for September and October.
January data is still scarce so it is difficult to tell whether the evident optimism of the business community is backed by hard economic facts.
Industrial production did jump 0.8 percent in December, reversing Novembers 0.7 percent decline, but the gain was largely driven by a 6.6 percent increase in utility demand as most of the country returned to seasonally cold temperatures.
The Philadelphia Fed Manufacturing Survey, like the Markit PMI Index, a sentiment indicator, rose to 23.6 in January from 21.5 in December for its best reading since November 2014. The median estimate was 15.8.
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