By TJ Kim, Bondsquawk
Manufacturing activity improved slightly in July suggesting that the recovery is still intact for the U.S. economy according to a survey. Markit released today its Flash Purchasing Managers’ Index for August which was up 0.50 to 51.90.
Although the increase was minimal, the data was appealing in that growth came from the Output, New Orders, and Quantity of Purchases components, all of which direct to active production activities. This month, manufacturers made larger purchases of inputs while consuming their inventories at a faster rate than the previous month, indicating larger output in the subsequent months.
Meanwhile, though at a slower rate than the previous month,both Employment and New Export Orders expanded in August. However, the increase was not significant enough to capsize the unemployment rate standing above at 8%.
Despite some improvements in the PMI, it does not appear that the economy is fragile since it is likely to grow slowly at best. Given the slow economic progress and endless talks of another round of Quantitative Easing, bond yields may remain low in the interim as evident by the U.S. 10-Yr Treasury Yield down at the mid-1.60%.
The above data were collected by Markit from a panel of participating companies in its survey. The data that Markit collected here have no relation to the ISM’s monthly Manufacturing Composite Index which captures a more comprehensive view on manufacturing. The ISM’s Manufacturing Composite will be released on September 4th.