Featured # Markets | 3 years ago

U.S. Factories Rally, Fighting Global Downward Pull

In September, U.S. factories increased activity, dusting off a one-month retraction in a indication the U.S. was resisting downward pull of the weakening global economy. The Institute for Supply Management (ISM) reported on Monday its index of national factory activity increased to 51.5 from 49.4 the month before, beating analyst projections in a poll. Levels above 50 signals the sector is growing.

“This is a relief,” stated Ian Shepherdson, an economist at Pantheon Macroeconomics.

The dollar ganed to session highs versus a basket of currencies while Treasury yields also increased. U.S. stocks cut losses. Factory output was a feeble spot for the U.S. economy early in the year as a global rout weighed on American factories. More recently, net exports added to economic growth in the second quarter and Monday’s report showed hints factories’ future sales could advance, with the ISM index for new orders gaining to 55.1 from 49.1 in August.

Manufacturing is wrestling with the lingering effects of a strong dollar and dropping oil prices. Activity in the sector, which amounts for 12 percent of the U.S. economy, has also been dented by an inventory correction. Another report on Monday displayed U.S. construction spending dropped for the second consecutive month in August to its lowest level in eight months, an unanticipated decrease driven by weakness across public and private sectors. The successive declines indicate home building may not help economic growth in the third quarter.

The Commerce Department commented construction spending fell 0.7 percent to a seasonally adjusted annual rate of $1.142 trillion in August. Economists had projected outlays to advance 0.2 percent. Private spending on household construction dropped 0.3 percent in August, and the government revised downward its estimate for overall construction spending during July.


Post a Comment

Your email address will not be published. Required fields are marked *