U.S. manufacturing sector contracts for 4th month in a row
Economic activity in the U.S. manufacturing sector contracted in November, the fourth month in a row, the Institute for Supply Management (ISM) reported Monday.
The Purchasing Managers' Index (PMI) stood at 48.1 percent, a decrease of 0.2 percentage point from the October reading. In September, the index was 47.8 percent, the lowest in a decade. Any reading below 50 percent indicates the manufacturing sector is generally contracting.
"Global trade remains the most significant cross-industry issue," Timothy Fiore, chair of the ISM's manufacturing business survey committee, said in a statement.
Of the 18 manufacturing industries, only five reported growth in November, while 13 industries reporting contraction, said Fiore. Among the six big industry sectors, food, beverage and tobacco products remain the strongest, while fabricated metal products the weakest.
The latest manufacturing data confirmed that Washington's tariffs against imports from China and other trading partners continued to take a toll on American businesses and the overall economy.
"Markets have downshifted further. The continued confusion surrounding China trade has kept export markets on edge. Profits are elusive. Cash-flow planning is paramount. The general economy is slowing down," said an executive from the wood products industry.
"The past relationship between the PMI and the overall economy indicates that the PMI for November (48.1 percent) corresponds to a 1.5-percent increase in real gross domestic product (GDP) on an annualized basis," said Fiore.
U.S. economic growth in the third quarter expanded at an annual rate of 2.1 percent, up from its previous estimate of 1.9 percent, the Commerce Department reported last week. The growth rate is slightly higher than the two-percent rate in the second quarter, and marks a deceleration from the first quarter's 3.1-percent rate.
Robert Kaplan, president of the Federal Reserve Bank of Dallas, said in a recent interview with CNBC that he expected U.S. economic growth to "be weak" in the fourth quarter of the year as businesses cut inventories due to trade uncertainty.