Featured # Business Headlines | 3 years ago

U.S. Manufacturing Weak This Year Despite Early Hopes

Despite hopes of an increase in U.S. manufacturing, the data is still weak. New orders are continuing to fall for long-lasting U.S. manufactured goods. The continued decline can be partially attributed to the strengthening of the dollar and lower oil prices we have recently been experiencing. The labor market has also proved its strength, with the number of Americans filing for unemployment being negligible. The strength has helped reassure individuals about the U.S. economy. Fear of recession is being pushed to the back of everyone’s minds as the labor market pushes forward, tightening conditions and firming inflation.

The Federal Reserve is also on track to raise interest rates at least two more times this year if the economy continues to improve. Gradual rate hikes can be possibly seen as soon as next month. U.S. manufacturing is loosing the battle and showing results much weaker than anticipated. Orders for long-lasting goods have declined 2.8 percent in the last month, and already 4.2 percent decline from the previous month. The last three months have continued to see decreases. Additionally, non-defense capital goods are also lacking in orders, with a drop of 3.1 percent in January being followed up with 1.8 percent fall this past month. With news of the declining rates in orders and weakening U.S. manufacturing of domestic goods,

U.S. stocks also took a plunge with oil being in the forefront for weak prices. The dollar was a strong competitor in the opposite direction, seeing increases due to the events occurring in Europe that caused consumers to react. As the strength of the dollar rises, the Fed is inclined to combat it by raising the interest rate again in the near future. While the U.S. job market remains strong, manufacturing is experiencing weak global consumption, with domestic demand doing its best to help offset the loss.

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