US factory activity rebounds improving hopes over economy

 
Ben Southwood
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US MANUFACTURING surprised onlookers with its strength in November, as data out yesterday suggested the pace of its recovery was rebounding.

Other data out yesterday showed new unemployment insurance claims were retreating back towards the levels seen before superstorm Sandy.

The US yesterday hit 52.4 on Markit’s purchasing managers’ index (PMI), a prominent business survey, up from 51 in October, and further above the 50 level that indicates no change in overall conditions. This level was a five-month high, after conditions in the US slid, having fluctuated around 55 for most of the recovery period.

“The US manufacturing sector reported the fastest pace of expansion for five months in November,” said Markit chief economist Chris Williamson, “with output, order books and employment all growing at increased rates. The survey is consistent with manufacturing output growing at an annualised rate of just over one per cent in November.”

This came as new jobless insurance claims bounced back to 410,000 from 451,000 last week, having previously increased by 90,000, a jump that many are putting down to recovery from the havoc wreaked by superstorm Sandy.

This left claims 19,000 higher than a year earlier, on the adjusted measure, though claims were actually 397,671 last week – some 43,907 lower than during the same week in 2011. Some economists thought that even with the Sandy distortion, the data pointed to a gloomy employment picture.

Peter Hooper at Deutsche Bank said: “It would not be surprising if some of the new claims are due to underlying weakness in the labour market.”