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U.S. manufacturing contracts for the first time in three years, a survey shows

Sunday, December 6th 2015 - 12:36 UTC
Full article 6 comments
The ISM index for the manufacturing sector dropped to 48.6 in November from an October reading of 50.1 that was just a tick inside growth territory. The ISM index for the manufacturing sector dropped to 48.6 in November from an October reading of 50.1 that was just a tick inside growth territory.

United States manufacturing activity contracted for the first time in three years in November under pressure from falling energy prices, the stronger dollar and slowing global growth, a survey shows.

 The Institute for Supply Management purchasing managers index for the manufacturing sector dropped to 48.6 in November from an October reading of 50.1 that was just a tick inside growth territory. The contraction, the first since November 2012, was unexpected, with analysts on average forecasting an increase to 50.4 on the index.

“The fact that the manufacturing ISM declined in November to its lowest level since June 2009, i.e. since the end of the Great Recession, is unequivocally a very bad surprise,” said Harm Bandholz, chief US economist at UniCredit Research.

But, he pointed out, manufacturing only represents about 12% of the US economy and less than 10% of total employment, and the much more important services sector “has continued to do very well”. Ten out of the 18 manufacturing industries surveyed reported contraction in November, “with lower new orders, production and raw materials inventories accounting for the overall softness,” the ISM said.

New orders fell particularly hard, tumbling four points to 48.9. Production dropped 3.7 points to 49.2. Both components had been growing in October. Inventories contracted at a faster pace, while customers' inventories fell slightly but were still considered to be too high for the fourth straight month.

“Downturn in China and European markets are negatively affecting our business,” one survey respondent in the machinery sector. ”The oil and gas industry is realizing that (the) 'low' oil prices are now the new reality with expectations to continue at this level for some time”, said a purchasing manager in the sector.

Categories: Economy, United States.

Top Comments

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  • Brasileiro

    This is the unspoken truth: international trade increasingly rejects the dollar. The power of the US adaptation to any reality that presents itself hostile to them is null.
    The dollar has been losing ground below. Europe and Japan for decades does not grow a millimeter. And when they grow a little is because the trade was diverted to the Yuan.
    The barrier that existed at the Yuan in international trade no longer exists. Only the US still keeps up this barrier.

    The decadence knocked on the door of the Saxon!

    From May / 2016 intra BRICS trade no longer use the international payment system SWIFT. The Bank of BRICS will take its place. This will be the first sign that the dollar will also lose its place as a source of reserves or world savings.

    And in the near future the US financial system will collapse. Misery will be followed by lack of state conditions to finance its monstrous debt provoke a reaction in people of that country that will be difficult to predict their outcome.

    It will be a very black future for a country that demonstrates a child proud of his Saxon nationality.

    Bye bye 5 Eyes

    Dec 06th, 2015 - 02:10 pm 0
  • Briton

    BRICS will probably use the dollar
    unless you know of another currency...

    Dec 06th, 2015 - 08:11 pm 0
  • Brasileiro

    All intra-BRICS trade is conducted in local currency of the destination country. And it are backed by swaps deposited in each Central Bank.

    We have no more need for dollars.

    Dec 06th, 2015 - 09:11 pm 0
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