WASHINGTON – Manufacturing activity shrank last month for the first time in three years, raising concerns about the overall health of the economy and feeding fears of another disappointing report on job growth later this week.
A closely watched index of the nation's factories fell to 49.7% in June from 53.5% in May, according to a survey by the Institute of Supply Management. A reading below 50% generally indicates that the sector is contracting, while above 50% means expansion. Survey participants blamed the slowdown on the European financial crisis and economic downturn, and slowing growth in China.
Most worrisome: the index for new orders, the best barometer of future production, plunged to 47.8% from 60.1% — the largest one-month decline in a decade. Readings of production and exports also fell sharply, while employment was roughly unchanged.
"Uncertainty about the state of economic expansion just got ratcheted up a notch with this report," RDQ Economics said in a research note.
Paul Dales, senior U.S. economist of Capital Economics, said risks to his forecast that a government report on Friday will show 125,000 job gains in June "are clearly on the downside." Monthly job growth averaged about 250,000 from December through February before averaging less than 100,000 the past three months...................
Manufacturing largely has driven the economic recovery and, until recently, seemed to defy other sluggish indicators, such as consumer spending and home sales. In the first quarter, industrial production grew at a 10% annual rate
http://www.usatoday.com/money/story/2012-07-02/economic-reports-july-2/55978352/1
A closely watched index of the nation's factories fell to 49.7% in June from 53.5% in May, according to a survey by the Institute of Supply Management. A reading below 50% generally indicates that the sector is contracting, while above 50% means expansion. Survey participants blamed the slowdown on the European financial crisis and economic downturn, and slowing growth in China.
Most worrisome: the index for new orders, the best barometer of future production, plunged to 47.8% from 60.1% — the largest one-month decline in a decade. Readings of production and exports also fell sharply, while employment was roughly unchanged.
"Uncertainty about the state of economic expansion just got ratcheted up a notch with this report," RDQ Economics said in a research note.
Paul Dales, senior U.S. economist of Capital Economics, said risks to his forecast that a government report on Friday will show 125,000 job gains in June "are clearly on the downside." Monthly job growth averaged about 250,000 from December through February before averaging less than 100,000 the past three months...................
Manufacturing largely has driven the economic recovery and, until recently, seemed to defy other sluggish indicators, such as consumer spending and home sales. In the first quarter, industrial production grew at a 10% annual rate
http://www.usatoday.com/money/story/2012-07-02/economic-reports-july-2/55978352/1
