U.S. Manufacturing Hits Rough Spot while Asia and EU Back Up

U.S Manufacturing hit a rough patch last month. If the condition remains, it would again be up to American consumers to drive economic growth.

According to Bloomberg, The Institute for Supply Management’s index fell by 3.2 points to 49.4 in August, the biggest drop in past three year and signaling contraction for the first time in six months.

September is crucial for U.S as many people believe it will determine whether the pullback of the manufacturing was an aberration or an early warning that manufacturing hasn’t quite found its footing after a significant drop since 2016. Meanwhile, the report raises the concern that a third-quarter growth rebound will be weaker than expected, and diminishes forecast that strength in the world’s largest economy will broaden beyond household spending.

Other figures showed filings for unemployment benefits stay almost the same for August, holding close to four-decade lows. Large automakers missed analysts’ estimates for U.S. vehicle sales in August, increasing the odds that industrywide sales won’t extend a streak of annual gains. A report is projected to show solid U.S. job gains in August, and strong data could potentially clinch a Fed interest-rate hike in

Coming a week after the U.S. posted sluggish second-quarter growth; the uninspiring manufacturing surveys may give Federal Reserve Chair Janet Yellen pause before a Fed meeting on Sept. 20-21 to decide whether to raise interest rates.

On the other hand, Manufacturers across Asia and Europe showed few signs of returning to health in August, as demand remained fitful at best, although Brexit bucked the global trend.

Britain’s manufacturing rebounded from the shock of June’s vote to leave the European Union, helped by a boost to exports from sterling’s post-Brexit slump.

Recent data have shown consumer demand holding up, and Thursday’s survey suggests manufacturing, which accounts for 10 percent of Britain’s economy, is weathering the impact of the vote better than feared.

Leave a Comment