- NEW YORK (Reuters)
- U.S. manufacturing barely grew in August after a sharp setback a month
earlier, a report said on Tuesday, stoking worries that the economy's already
weak recovery may stagnate in coming months.
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- The Institute for Supply Management said its closely
watched index of factory business conditions was unchanged in August at
50.5, posting a seventh month of growth but coming in below expectations
for a rise to 51.6.
-
- Any reading above 50 signals growth, while one below
50 indicates contraction in a sector that makes up roughly one-sixth of
the U.S. economy.
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- In what ISM said was a cause for concern for manufacturers
the rest of the year, the new orders index fell in August to 49.7 after
having tumbled more than 10 points in July to 50.4. That showed new orders,
a key source of future growth, declining for the first time since last
November.
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- Only eight of 20 industries posted growth on the month,
ISM said.
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- "It's not making anyone happy about the economy,"
said Cary Leahey, senior U.S. economist at Deutsche Bank Securities.
-
- U.S. stocks extended early losses on the report, with
the Dow Jones industrial average losing more than 3 percent. Safe-haven
U.S. Treasuries rallied, pushing yields on benchmark 10-year notes close
to four-decade lows below 4 percent.
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- After boosting production earlier in the year to replenish
depleted inventories, factories have gradually scaled back output and have
proven reluctant to hire new workers with the outlook for demand in doubt.
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- Norbert Ore, chair of the ISM business survey committee,
said that another month showing new orders close to the unchanged level
would "indicate real softness in the balance of the second half."
But Ore said the August survey did not suggest a coming contraction in
manufacturing.
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- Layoffs continued at factories, extending a trend seen
since mid-2000 even as the employment index edged up to 45.8 in August
from 45.0 in July.
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- But in a sign that the recent run-up in prices may be
abating, the prices paid index fell sharply in August to 61.5 from 68.3
a month earlier.
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- Tempe, Ariz.-based ISM bases its manufacturing index
on data provided monthly by purchasing executives at over 350 industrial
companies and reflects changes in the current month compared with the previous
month.
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