[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
Status: Not Logged In; Sign In
Business Title: U.S. Manufacturing Index Falls to Two-Year Low U.S. manufacturing expanded in July at the slowest pace in two years, indicating the industry thats been driving the economic expansion is starting to weaken. The Institute for Supply Managements factory index fell to 50.9 last month from 55.3 in June, the Tempe, Arizona-based group said today. Economists projected the index would drop to 54.5, according to the median forecast in a Bloomberg News survey. Figures greater than 50 signal expansion. Manufacturers are facing stagnant consumer spending, raising the risk that production will be tempered further even as parts shortages from Japans earthquake dissipate and commodity costs ease. Orders to factories shrank for the first time since June 2009 and backlogs eased for a third month, signs economic growth may be restrained. Manufacturing was really the one sector that was moving along quite nicely and now its decelerating, said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. Businesses have cut back on orders and employment because they are just not seeing the demand that they expected. The economy is just not picking up momentum in the second half. Estimates for the manufacturing index from 80 economists ranged from 51 to 56. Stocks fell, erasing an early rally triggered by speculation U.S. lawmakers will vote in favor of a plan to raise the debt ceiling. The Standard & Poors 500 Index declined 0.6 percent to 1,284.52 at 10:32 a.m. in New York. Treasuries rose, pushing down the yield on the benchmark 10-year not to 2.73 percent from 2.80 percent on July 29. Asia to Europe Manufacturing indexes from Asia to Europe fell last month as demand weakened and the global recovery from recession lost momentum, other reports showed. U.K., Russian and Australian manufacturing shrank, while the pace of factory growth slowed in Europe and China, according to surveys. Todays ISM report showed the production index decreased to 52.3 from 54.5 in June. The new orders measure dropped to 49.2 from 51.6. The gauge of export orders rose to 54 from 53.5. The index of prices paid dropped to 59 from 68. A measure of supplier deliveries decreased to 50.4 from 56.3. The measure of orders waiting to be filled dropped to 45, the lowest since April 2009, from 49. The inventory index fell to 49.3 from 54.1, while a gauge of customer stockpiles declined to 44 from 47. The employment index fell to 53.5, the lowest since December 2009, from 59.9 the prior month. Americans are reducing purchases in response to sluggish job creation and higher fuel costs. The economy expanded at a 1.3 percent annual rate in the second quarter, less than forecast, Commerce Department figures showed last week. Household spending rose at 0.1 percent pace, the weakest since the second quarter of 2009. Growth cooled in eight of the Federal Reserves 12 regions, the central bank said last week in its Beige Book survey. Many regions said manufacturing slowed or held steady, according to the report, which covers June and the first half of July. Business activity in the U.S. expanded at a slower pace in July, the Institute for Supply Management-Chicago Inc. said July 29. Fed policy makers, including Chairman Ben S. Bernanke anticipate the economy will strengthen in the second half of 2011 as factors that are likely to be temporary subside. Dow Chemical Co. (DOW) Chief Executive Officer Andrew Liveris said his company sees growth continuing to gain traction in developed markets, albeit at a somewhat uneven and jagged pace given persistently high unemployment in the U.S. and sovereign debt concerns in Europe. In fast-growing emerging geographies, despite some inflationary pressures, the rapid expansion of the middle class continues to drive robust underlying fundamentals, Liveris said in a July 27 statement. Manufacturers may need to rely more on overseas demand, which is being driven a weak U.S. dollar. Dow, the largest U.S. chemical maker, reported second- quarter profit that exceeded analysts estimates, led by gains in basic chemicals and plastics.
Post Comment Private Reply Ignore Thread |
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]
|