The American manufacturing sector fell deeper into recession last month, according to the latest factory data.
December saw manufacturing slow to its slowest pace since the start of the pandemic, as demand remained low and production began to weakened, according to data from the Manufacturing ISM Report On Business® and the S&P Global U.S. Manufacturing PMI report.
The S&P’s manufacturing index fell to 46.2 in December from 47.7 in November, for its lowest reading since May 2020, when most of the country was in lockdown and remains unchanged from the preliminary reading.
Meanwhile, ISM’s report saw factory activity drop from 49.0 in November to 48.4 last month. Any reading below 50.0 indicates a contraction in that sector.
Both indexes suggests that U.S. manufacturing activity declined in December for the second consecutive month, after almost 30 months of growth.
“The U.S. manufacturing sector again contracted, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began. With Business Survey Committee panelists reporting softening new order rates over the previous seven months, the December composite index reading reflects companies’ slowing their output,” said Timothy R. Fiore, chairman of ISM’s Manufacturing Business Survey Committee.
Manufacturing Prices Begin to Fall as Activity Slows
The only positive note regarding the contraction is that manufacturing prices may finally come down, with the ISM pricing index sliding down to 39.4. Prices have declined at a quicker rate from November, when the ISM price index was at 43.
However, the latest ISM reading of correlates with a 0.1 percent “decrease in real gross domestic product on an annualized basis,” said Fiore.
Inflation-adjusted U.S. GDP fell in the first half of 2022, but rebounded for a 3.2 percent annualized gain in the third quarter.
Client Demand Leads to Contraction in Manufacturing Sector in December
The S&P said that the contraction in American industrial activity was led by an accelerated downturns in output and new orders, as companies attributed weak client demand to a rise in economic uncertainty and high inflation,.
“The manufacturing sector posted a weak performance as 2022 was brought to a close,” said Sian Jones, senior economist at S&P Global Market.
“Demand for goods dwindled as domestic orders and export sales dropped. Muted demand conditions also led to downward adjustments of stock holdings, as excess inventories built earlier in the year were depleted in lieu of further spending on inputs. With the exception of the initial pandemic period, stocks of purchases fell at the steepest rate since 2009,” said Jones.
Concerns regarding the economic outlook was beginning to weigh on firms who were more cautious in terms of hiring last month, she noted.
Jones said that job growth last month in the sector was slight and was largely linked to skilled hires.
Declining activity toward the end of 2022 saw an ease in price pressures, leading to a moderation in factory input and output inflation, according to the S&P survey. This caused the bottlenecks in the supply chain to decline from earlier in the year.
The pace in selling prices also began to slow, though it still rose sharply.
“Slower upticks in inflation signal the impact of Federal Reserve policy on prices, but growing uncertainty and tumbling demand suggest challenges for manufacturers will roll over into the new year,” Jones said.
Many investors are hoping that the latest declines in manufacturing and other signs of easing inflation will encourage the Fed to soften its aggressive approach on interest rates.
The central bank’s series of interest rate hikes are a prime factor behind the slowdown in the economy.
Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.
"Factory" - Google News
January 05, 2023 at 02:24AM
https://ift.tt/5ApGgos
US Manufacturing Falls Deeper Into Recession, Factory Data Show - The Epoch Times
"Factory" - Google News
https://ift.tt/4J9GyTi
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "US Manufacturing Falls Deeper Into Recession, Factory Data Show - The Epoch Times"
Post a Comment