Manufacturing Growth Hits Lowest Level In 2 Years
How’s that Obama Summer of Recovery (2011 edition) going?
The Institute for Supply Management, a trade group of purchasing executives, said Monday that its index of manufacturing activity fell to 50.9 percent in July from 55.3 percent in June. The reading was the lowest since July 2009 — one month after the recession officially ended.
Any level above 50 indicates growth. The manufacturing sector has expanded for 23 straight months.
Still, new orders shrank for the first time since the recession ended. Companies slashed their inventories after building them up in June. Output, employment, and prices paid my manufacturers all grew more slowly in July.
The disappointing report on manufacturing is the first major reading on how the economy performed in July. It suggests the dismal economic growth in the first half of the year could extend into the July-September quarter.
Of course, that’s part and parcel with the rest of the economic numbers of late…
Construction spending rose 0.2 percent in June, to a seasonally adjusted annual rate of $772.3 billion, the government said. But even with the gains, spending remains slightly above an 11-year low hit in March and is just half of the $1.5 trillion pace considered healthy by most economists.
The economy expanded at a dismal 1.3 percent annual rate in the April-June period after an even worse 0.4 percent increase in the first three months of the year, the government said Friday.
The factory sector has expanded in every month but one since the recession ended in June 2009. The ISM’s index topped 60 for four straight months at the start of the year.
But manufacturing has stumbled in recent months. A parts shortage stemming from Japan’s March 11 earthquake disrupted automakers’ supply chains, cutting into the output of new cars. And high gas prices left Americans with less money to spend on discretionary items, such as vacations, furniture and appliances.
The index fell in May to 53.5 from April’s reading of 60.4. That was the sharpest one-month drop since 1984.
Employers have responded by pulling back on hiring. The economy added just 18,000 net jobs in June, the fewest in nine months, and the unemployment rate rose to 9.2 percent. Hiring by manufacturers was nearly flat in the April-June period.
Boy, that Keynesian stimulus sure jump-started the economy, didn’t it?