U.S. manufacturing still strong despite slowing

Source: Dukascopy Bank SA
"The latest increase in work-in-hand (but not yet completed) was less steep than the survey-record high seen in February, suggesting that some companies have started to fulfill orders that were disrupted by adverse weather earlier in the year"
- Markit

In case the Federal Reserve wants to start raising interest rates in the first half of 2015, it needs a clear indication the world's largest economy is on the path of recovery, and growth will be stable around 2.5%-3%. Monday's data, however, raise some concerns about the sustainability of economic growth, as manufacturing figures for March disappointed markets.

A report from Markit showed a gauge of manufacturing activity slowed to 55.5 this month from 57.1 in February, missing analysts' expectations for a deceleration to 56.6. On the back of the latest reports policymakers and economists breathed a sigh of relief that the sector will continue gaining momentum, recovering from the severe weather conditions. March's performance is slightly below the three-year high, while despite a slowdown, companies reported on a higher levels of output and increased volumes of new work. This week's figure rounds off the best quarterly growth for the last three years, suggesting the manufacturing sector will provide a significant boost to the overall economic growth in the first quarter. While figures had a muted impact on markets, the Markit PMI is a leading economic indicator, as companies react quickly to any changes in the business cycle. Moreover, it gives a first sneak peek into manufacturing conditions over the observed period.
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