News / Economy

US factory activity, construction spending unexpectedly fall

Monday, 02 December 2019 6:59 PM [ Last Update: Monday, 02 December 2019 7:05 PM ]

Employees inspect Mercedes-Benz C-Class cars at the Mercedes-Benz US International factory in Vance, Alabama. (AFP photo)

US manufacturing output deteriorated for the fourth consecutive month, damaged by trade conflicts and a weakening global economy.

The Institute for Supply Management, an association of purchasing managers, said Monday that its manufacturing index dipped to 48.1 last month from 48.3 in October. Anything below 50 signals contraction.

US factories have been on a losing streak since August.

New orders, production and hiring all dropped for the fourth straight month. Export orders fell in November after rising in October.

Continued contraction in manufacturing could put the Federal Reserve in a difficult policy position. The US central bank in October cut interest rates for the third time this year and signaled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008.

US President Donald Trump has imposed import taxes on foreign steel, aluminum and thousands of goods from China. Businesses have been reluctant to invest until they have a clearer idea whether, when and how the trade conflicts will end.

Trump on Monday restored tariffs on steel and aluminum imports from Brazil and Argentina.

Economists say without a complete trade deal, manufacturing is unlikely to rebound much and the sector could remain under pressure.

Manufacturing is also facing challenges from a domestic inventory bloat, slowing profit growth and weak overseas demand.

US factory activity sinks to 10-year low in September

US manufacturing activity tumbled to a more than 10-year low in September.

In a separate report on Monday, the US Commerce Department said construction spending dropped 0.8% as investment in private projects tumbled to its lowest level in three years. Data for September was revised to show construction outlays declining 0.3% instead of rising 0.5% as previously reported.

In October, spending on private construction projects dropped 1.0% to $956.3 billion, the lowest level since October 2016, after declining 1.1% in September. It was held down by a 0.9% decrease in spending on private residential projects. Outlays on residential construction dropped 1.1% in September.

Spending on private nonresidential structures, which includes manufacturing and power plants, plunged 1.2% in October to the lowest level since January 2018.

(Source: Agencies)

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