Manufacturing in U.S. Shrank in August for Third Month
U.S. manufacturing shrank for a third month in August in the longest decline since the recession ended in 2009, threatening to deprive the world’s largest economy of a driver of growth.
The Institute for Supply Management’s factory index fell to 49.6 last month, the lowest since July 2009, from 49.8 in July, the Tempe, Arizona-based group said today. Economists in the Bloomberg survey projected an August reading of 50, which is the dividing line between expansion and contraction. Measures of orders and production dropped to three-year lows.
Stocks fell early on concern American factories, which sparked the U.S. expansion three years ago, are succumbing to a manufacturing slowdown that stretches from Asia to Europe. The data underscore Federal Reserve Chairman Ben S. Bernanke’s view that the economy is too weak to spur hiring and may require additional monetary stimulus.
“Manufacturing has been one of the stalwarts of an otherwise lackluster recovery but it’s starting to show some cracks,” said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, who correctly forecast the index. “Until we get more clarity on the fiscal policy outlook here, more clarity on Europe and some signs on the course of China’s economy, manufacturing is just going to languish.”