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US manufacturing contracts amid global slow down | US manufacturing contracts amid global slow down |
(about 2 hours later) | |
US manufacturing shrank by the greatest amount for six years in December. | US manufacturing shrank by the greatest amount for six years in December. |
Slowing growth overseas, a stronger US dollar and low oil prices all weighed on factory production, according to the Institute for Supply Management. | Slowing growth overseas, a stronger US dollar and low oil prices all weighed on factory production, according to the Institute for Supply Management. |
Production on the ISM index slipped from 48.6 in November to 48.2. Any number below 50 indicates factory activity is contracting. | Production on the ISM index slipped from 48.6 in November to 48.2. Any number below 50 indicates factory activity is contracting. |
The US data coincided with data showing a decline in Chinese manufacturing that spooked global markets on Monday. | The US data coincided with data showing a decline in Chinese manufacturing that spooked global markets on Monday. |
The Dow Jones was down nearly 400 points in morning trading. | The Dow Jones was down nearly 400 points in morning trading. |
"I think this downward trend is pretty well established and the fundamentals behind it are well established," said Dan North, chief economist at Euler Hermes North America. | |
"The collapse in oil prices and in the demands for pipe and metals pieces in the oil industry weighs on US manufacturing." | "The collapse in oil prices and in the demands for pipe and metals pieces in the oil industry weighs on US manufacturing." |
Construction spending | Construction spending |
Separately, figures from the construction spending painted a similarly gloomy picture. | Separately, figures from the construction spending painted a similarly gloomy picture. |
Construction spending slipped for the first time in a year and a half, according to the Commerce Department, falling 0.4% in November. | Construction spending slipped for the first time in a year and a half, according to the Commerce Department, falling 0.4% in November. |
The drop is the biggest since June 2014. | The drop is the biggest since June 2014. |
Mr North called the slowdown "concerning" because of its importance to the US economic recovery. | Mr North called the slowdown "concerning" because of its importance to the US economic recovery. |
"Because of the 18 months' positive growth and the warm weather in November, a slip concerns me a bit," he said. | "Because of the 18 months' positive growth and the warm weather in November, a slip concerns me a bit," he said. |
Previous construction spending data from January 2005 to October 2015 was also revised by the government after a "processing error" was revealed. | Previous construction spending data from January 2005 to October 2015 was also revised by the government after a "processing error" was revealed. |
The corrected data indicates construction spending over that period was not as strong as initially reported. October 2015 spending grew by just 0.3%. | The corrected data indicates construction spending over that period was not as strong as initially reported. October 2015 spending grew by just 0.3%. |
Experts say the correction may cause analysts to revise down their construction spending estimates for 2016. | Experts say the correction may cause analysts to revise down their construction spending estimates for 2016. |
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