Factory output rises in US, euro area

WASHINGTON/LONDON • Manufacturing in the US accelerated to the highest reading since August 2014 amid rising new orders and production while employment eased.

The Institute for Supply Management's (ISM) Manufacturing PMI rose to 57.7 in February from 56 the month before, well above market expectations of 56.

Comments from the country's supply executives indicate strong sales and demand, and "reflect a positive view of business conditions with a watchful eye on commodities and the potential for inflation", said the ISM.

Meanwhile, euro area manufacturing accelerated for a sixth month in February amid signs that inflation pressures may be starting to build as factories struggle to keep up with demand.

Euro area PMI climbed to 55.4, IHS Markit said yesterday. The reading compares with a flash estimate of 55.5 and is up from 55.2 in January. Companies raised output charges at the fastest pace in more than five years as higher commodity prices and a weaker euro drove up costs, while suppliers took longer to fill orders, the company said.

The report follows a series of strong data suggesting the currency bloc's economy is gathering momentum even amid heightened political uncertainty. The European Central Bank may start debating an exit strategy from unconventional stimulus next week as inflation is approaching its goal of just below 2 per cent, according to Bloomberg.

"Euro area manufacturers are reporting the strongest production and order-book growth for almost six years, in what's looking like an increasingly robust upturn," said Mr Chris Williamson, chief economist at IHS Markit.

Manufacturing expanded in all of the region's major economies, with activity strongest in the Netherlands, Austria and Germany.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on March 02, 2017, with the headline 'Factory output rises in US, euro area'. Print Edition | Subscribe