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US manufacturing activity shrinks US manufacturing activity shrinks
(about 3 hours later)
Gloomy reports on US manufacturing and construction have underlined the weakness of the US economy. Gloomy reports on US construction and manufacturing have underlined the weakness of the US economy.
Factory activity shrank in February according to a report from the Institute for Supply Management (ISM). The Commerce Department said that construction spending fell 1.7% in January, the biggest fall in 14 years.
Its index for national factory activity fell to 48.3 in February. A reading below 50 indicates that the manufacturing sector is contracting. Spending on homebuilding has been slashed, but the report also showed that there were cutbacks on commercial projects such as hotels and highways.
A separate report from the US Commerce Department showed that construction spending fell 1.7% in January. Separately a report from the Institute for Supply Management (ISM) showed that factory activity shrank in February.
That was the steepest fall in spending for 14 years. Recession worries
Spending has been slashed on residential projects, but the latest report showed that there were cutbacks on commercial buildings such as hotels and highways. Its index for national factory activity fell to 48.3 in February from 50.7 in January. A reading below 50 indicates that the manufacturing sector is contracting.
The report also showed that December's decline was worse than the initial estimate, with the fall revised down to 1.3% from 1.1%. It was the weakest report since April 2003 and will raise fears that the US economy is heading towards a recession.
While the report on manufacturing showed contraction, analysts thought the findings could have been worse. "The market is realizing that the economy has been in a recession for the past couple of months and will continue to be so until the fall," said Thomas di Galoma at Jefferies & Co.
"What's happening in corporate America is bleeding into the broader economy," he added.
But other economists said the findings could have been worse.
"The (ISM) report was bad, but not as bad as expected. People thought we were going to go off a cliff, especially after last week's reports, " said Doug Roberts, chief investment strategist at Channel Capital Research."The (ISM) report was bad, but not as bad as expected. People thought we were going to go off a cliff, especially after last week's reports, " said Doug Roberts, chief investment strategist at Channel Capital Research.