US manufacturing activity falls to lowest level in decade

WASHINGTON (AP) — United States (US) manufacturing activity fell to the lowest level in more than a decade, as the sector was hurt by weakening demand and last year’s global economic slowdown.

The Institute for Supply Management, an association of purchasing managers, said on Friday that its manufacturing index dropped to 47.2 in December, from 48.1 in November. Last month’s level was the lowest since June 2009, when the US economy was at the tail end of the Great Recession.

Any reading below 50 signals contraction — and the index has been below that crucial level since August. The new orders, production and employment components of the index were all negative.

But other components of the index — such as a jump in prices — suggest that the setback for manufacturing has bottomed out, said Tim Fiore, chair of ISM’s manufacturing business survey committee. “We’ve probably seen the worst of it behind us,” Fiore said.

The manufacturing sector last year was rocked by slower global growth and the escalation of trade tensions between the US and China. US President Donald Trump has announced plans to sign an initial agreement with China this month that may ease some of the drag caused by tariffs and threats of additional import taxes last year.

Still, the survey of companies by ISM shows that manufacturers have suffered. Companies surveyed indicated that there continues to be uncertainty about trade and weak demand from abroad.

Out of the 18 industries surveyed, just three reported expansion in last December: Food, computers and a category the association labelled as “miscellaneous”.

People work on the Boeing 737 MAX 8 assembly line during a brief media tour in Boeing’s 737 assembly facility in Renton, Washington on March 27, 2019. PHOTO: AP