U.S. factory activity increases in August: Markit

A view of the jet assembly line at a Cessna manufacturing plant in Wichita, Kansas March 12, 2013.

Credit: Reuters/Jeff Tuttle

NEW YORK | Thu Aug 22, 2013 9:08am EDT

NEW YORK (Reuters) - U.S. manufacturing activity hit a five-month high in August as hiring picked up and new orders increased at their fastest pace since January, an industry report showed on Thursday.

Financial data firm Markit said its "flash," or preliminary, U.S. Manufacturing Purchasing Managers Index rose to 53.9, its best showing since March, and just below economists' forecast of 54.0. The index stood at 53.7 in July. A reading above 50 indicates expansion.

Overall output, however, declined to 53.4 from 54.8, its slowest rate of growth in three months, suggesting the pace of overall U.S. economic expansion remains "disappointingly sluggish," said Markit chief economist Chris Williamson.

"Hopefully the faster growth of new orders seen during August will translate into increasingly strong production gains in coming months, and also boost hiring," he added.

New orders rose to 56.5, a seven-month high, from 55.5 in July, and firms took on new workers at their fastest pace in four months. But Williamson said the manufacturing sector "is still barely contributing to nonfarm payroll growth."

U.S. employers slowed their pace of hiring last month but the jobless rate declined. Global investors, however, still expect the Federal Reserve will start winding down its massive stimulus program this year, with many betting the central bank could slow its monthly bond purchases as soon as September.

Markit's "flash" reading is based on replies from about 85 percent of the U.S. manufacturers surveyed. A final reading will be released on the first business day of the following month.

(Reporting By Steven C. Johnson; Editing by Chris Reese)

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U.S. labor market, factory data show economy firming

A job-seeker completes an application at a career fair held by civil rights organization National Urban League as part of its annual conference, in Philadelphia July 25, 2013.

Credit: Reuters/Mark Makela

By Jason Lange

WASHINGTON | Thu Aug 22, 2013 10:55am EDT

WASHINGTON (Reuters) - The number of Americans filing new claims for jobless benefits last week held near a six-year low and U.S. manufacturing activity rose this month, suggesting the economy is starting to find firmer footing.

Initial claims for state unemployment benefits climbed 13,000 to 336,000, just above the level expected by economists in a Reuters poll, Labor Department data showed on Thursday.

Despite the increase, the four-week moving average for claims, which smooths out weekly volatility, fell to its lowest level since November 2007. That backed the widely-held view that U.S. economic growth will accelerate in the second half of the year, and hinted at a stronger pace of hiring in August.

"The trend in the data has been signaling some recent improvement in the labor market," said Daniel Silver, an economist at JPMorgan in New York.

Separately, financial data firm Markit said its preliminary index on factory activity rose in August to 53.9, its best showing since March. A reading above 50 indicates expansion.

"Hopefully the faster growth of new orders seen during August will translate into increasingly strong production gains," said Markit chief economist Chris Williamson.

The U.S. economy has grown at a lackluster pace in recent months, hurt in part by the impact of federal budget cuts.

An index of leading economic indicators published on Thursday by the Conference Board rose 0.6 percent in July, supporting the expectations that growth would accelerate in the remainder of the year.

The generally upbeat data fueled small gains in U.S. stock prices. Yields on U.S. government debt were little changed.

The Federal Reserve is closely monitoring the labor market as it mulls plans to draw down a major economic stimulus program in which it buys long term bonds to keep borrowing costs low.

Fed Chairman Ben Bernanke said last month that the central bank plans to start scaling back on the program this year, and many economists expect it will begin reducing monthly bond purchases in September.

The claims data was collected during the same week the Labor Department surveys employers for its monthly employment report, and the trend hinted that hiring may pick up during August.

At 330,500, the four-week average was about 5 percent lower than it was during the employment report's survey week in July, when employers added a lackluster 162,000 jobs to payrolls.

Still, economists are wary of the claims report's predictive power for hiring. Employers now appear to be laying off workers at roughly pre-recession levels, yet the pace of hiring has appeared to slow since the spring.

"The pace of layoffs may continue to ease, but there is little indication that firms have become more inclined to hire," economists at RBS said in a note to clients.

The claims report showed the number of people still receiving benefits under regular state programs after an initial week of aid rose 29,000 to about 3 million in the week ended Aug 10.

(Additional reporting by Margaret Chadbourn in Washington and by Steven C. Johnson and Richard Leong in New York; Editing by Paul Simao)

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