Factories report fast growth in US as economy lifts

US MANUFACTURERS are reporting the fastest expansion in four years, adding to the perception that the country’s growth is increasingly picking up strength.

Markit’s purchasing managers’ index (PMI) for the sector hit 57.5, the highest seen since April 2010. Output, new orders, employment and backlogs of work all increased from May, and picked up speed.

Cost inflation also hit the highest level since the very beginning of the year, according to Markit. Factory gate prices also rose for the first time in 2014, adding to the view that the recovery is prompting an inflationary uptick.

“The survey data suggest that GDP should be set to rise by at least three per cent after the one per cent decline in the first quarter,” said Markit chief economist Chris Williamson.

New export orders are still growing, but at a slower pace than most other parts of the index.

Williamson added: “If there’s a weak spot it’s the near-stagnation of exports, which raises the possibility that trade will have acted as a drag on the economy in the second quarter.”

Figures released yesterday also demonstrated more strength in the US housing market: sales of existing homes rose 4.9 per cent between April and May, the fastest increase in nearly three years.