Investing.com – Activity in the US manufacturing sector registered a surprise increase in September, according to preliminary data released on Monday.
In a report, market research group Markit said that its flash manufacturing purchasing managers’ index (PMI) rose to 53.2 in October from the prior month’s final reading of 51.5.
Analysts had expected no change to September’s reading.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Markit noted that the data showed the strongest upturn in business conditions for 12 months and that both output and new order growth hit one-year peaks.
The market research group added that manufacturers had reported the fastest expansion of input buying since June 2015 and that input cost inflation had accelerated to its strongest in almost two years.
“Manufacturing showed further signs of pulling out of the malaise seen earlier in the year, starting the fourth quarter on a solid footing,” Markit chief economist Chris Williamson commented.
“Both output and new orders are rising at the fastest rates for a year amid increasingly widespread optimism that demand will pick up again after the presidential election, which has been commonly cited as a key factor that has subdued spending and investment in recent months,” he said.
Williamson further noted that there were signs of manufacturers building inventories which should provide an extra boost to the economy in the fourth quarter.
“Weak export growth, attributable to the strong dollar, and lackluster hiring remain big areas of disappointment, and highlight an ongoing dependency on domestic demand and a need to keep labor costs low amid a still-uncertain economic and political outlook,” Williamson concluded.
In an immediate reaction, EUR/USD was trading at 1.0890 from around 1.0894 ahead of the release of the data, GBP/USD was at 1.2233 from 1.2234 earlier, while USD/JPY was at 104.08, compared to the prior 103.97.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 98.62, compared to 98.57 ahead of the report.
Meanwhile, U.S. stocks were trading higher after the open as the Dow 30 gained 115 points, or 0.63%, the S&P 500 rose 13 points, or 0.61% , and the tech-heavy Nasdaq Composite traded up 44 points, or 0.84%.
Elsewhere, in the commodities market, gold futures traded at $1,270.45 a troy ounce, compared to $1,272.00 ahead of the data, while crude oil traded at $50.29 a barrel from $50.30 earlier.