manufacturing takes hit in us
Last Updated : GMT 18:08:33
Arab Today, arab today
Arab Today, arab today

Manufacturing takes hit in US

Arab Today, arab today

Arab Today, arab today Manufacturing takes hit in US

Washington - Arabstoday

The US manufacturing sector unexpectedly contracted in June for the first time in nearly three years as new orders tumbled, according to an industry report released on Monday. The Institute for Supply Management said its index of national factory activity fell to 49.7 from 53.5 the month before, missing expectations of 52.0, according to a Reuters poll of economists, and below even the lowest forecast of 50.5. It was the first time since July 2009 that the index has fallen below the 50 mark that indicates contraction. “The implication here is a very soft second half of the year,” said Jacob Oubina, senior US economist at RBC Capital Markets in New York. Oubina said with growth slowing, there is a good chance the Federal Reserve could undertake another round of bond buying to prop up the economy at its next meeting. New orders dropped to their lowest level since April 2009 with the index at 47.8 compared with 60.1, while the employment gauge slipped to 56.6 from 56.9. US stocks turned lower immediately after the data, while Treasury bonds extended price gains and the dollar fell further against the yen. Europe, Asia Eurozone manufacturing took another hefty blow in June while China and Japan, Asia’s biggest exporters, were hit by crumbling orders from abroad, intensifying worries that the global economy is deteriorating. Business surveys released on Monday, covering thousands of factories across the world, showed activity at Chinese and Japanese manufacturers hitting seven-month lows, and signalled that worse may be to come for eurozone companies. Released after a European Union summit when leaders agreed to help Spain and Italy borrow more affordably, the purchasing managers indexes, or PMIs, highlighted the problems policymakers face to restore the eurozone’s economic fortunes. This and the PMIs added weight to expectations that the European Central Bank will ease monetary policy on Thursday by cutting interest rates 25 basis points, to a record low of 0.75 per cent. “There is no doubt that there are common driving factors now in the global slowdown and the euro area is probably the most dominant one,” said Jeavon Lolay, global economist at Lloyds Banking Group. “It is hitting confidence, it is hitting exports and it is probably hitting credit as well and bank lending.” Markit’s Eurozone Manufacturing PMI was unchanged at 45.1 in June, above the preliminary reading of 44.8 and holding at its lowest reading since June 2009, well below the 50 mark that signals growth. Manufacturing activity in Germany and Spain contracted at the fastest pace in almost three years, and while French and Italian PMIs rose slightly, they were still below the 50 mark. Europe’s economic ailments left Asian factories, which rely heavily on demand from rich Western states, reeling in June. In addition to slowing growth in China and Japan, the PMIs for South Korea and Taiwan showed their manufacturing sectors contracting for the first time in five months. In India, where the economy is more reliant on domestic activity, the factory sector picked up in June. But its new export orders growth was the weakest in seven months. Monday’s HSBC Chinese factory PMI showed factory activity shrank at its fastest pace in seven months in June. The index slipped to 48.2 from May’s 48.4. Japan’s June PMI, released on Friday, slipped to 49.9, below the growth watermark of 50. Its index for new export orders dropped to 47.5, the sharpest pace of contraction since February. —

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