US factory activity hits 3-month low in Sept-Markit

NEW YORK Tue Oct 1, 2013 8:57am EDT

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NEW YORK Oct 1 (Reuters) - U.S. manufacturing activity grew at its slowest clip in three months in September and firms took on fewer new workers, an industry report showed on Tuesday.

Financial data firm Markit said its final U.S. Manufacturing Purchasing Managers Index stood at 52.8 last month, matching an initial reading taken in mid-September but below August's 53.1.

A reading above 50 indicates expansion in the sector

The rate of output growth was the fastest since March, with the sub-index rebounding to 55.3 from 52.5 in August.

But demand from overseas fell for the first time in three months, slowing the overall rate of new orders and suggesting September's output gain may prove temporary.

A gauge of employment in the sector slipped to 51.3 last month from 53.1 in August.

"Manufacturers are battening down the hatches, cutting back on employment wherever possible to boost productivity," said Markit chief economist Chris Williamson. "Job creation could well stall altogether unless demand picks up again."

Economists polled by Reuters expect the broader U.S. economy added 180,000 jobs last month, up slightly from 169,000 in August.

Signs that hiring is slowing could further delay Federal Reserve plans to wind down support for the economy. The Fed surprised markets last month by maintaining current monthly bond purchases, designed to keep interest rates low and stoke growth.

"Policymakers at the Fed will surely want to see the economy faring far better than these data are suggesting before countenancing any cuts to the stimulus," Williamson said.

The Markit data has lately painted a gloomier picture of the manufacturing sector than that from the Institute for Supply Management, which showed U.S. factories in August enjoyed their fastest pace of growth in more than two years.

But that report also showed a slower pace of hiring in August. The ISM will release its September index at 10 a.m. on Tuesday (1400 GMT).

The two surveys use some different methodologies, including one related to seasonal adjustment.

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