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U.S. manufacturing activity shrank in August to its lowest level since January 2016, according to Tuesday’s Institute for Supply Management manufacturing index.
The ISM’s index of overall factory activity fell to 49.1 in August from 51.2 a month earlier. Economists had expected it to remain steady or slightly contract but to remain above 50.
Readings - Contraction - Time - Index - Contraction
Readings below 50 signal contraction. The last time the index signaled a contraction was January 2016, when the gauge fell to 48.
While the index indicates a contraction in manufacturing, at 49.1 it is not necessarily an indicator of a contraction in the broader economy. Manufacturing is about 12 percent of the U.S. economy and less than 10 percent of jobs. But becausae manufacturing jobs often come with higher wages, a decline in manufacturing can have an outsized drag on the overall economy.
New - Orders - Points - New - Orders
New orders declined 3.6 points to 47.2. New orders for export fell to 43.3, five points lower than the previous month, indicating very weak demand internationally and reflecting the relative strength of the dollar against many foreign currencies. A stronger dollar makes U.S. exports more...
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