Experts surprised
US industry is accelerating its decline
March 1, 2024, 8:39 p.m
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After stagnation in December, US industry cut production in January. Current data does not show a better picture for February. Analysts are surprised by the negative development of the purchasing managers’ index.
US industry has surprisingly accelerated its long decline and is not emerging from the crisis. The Purchasing Managers’ Index for the sector fell to 47.8 points in February from 49.1 points in the previous month, according to the just-published company survey by the Institute for Supply Management (ISM). Economists surveyed by Reuters, however, had expected an increase to 49.5 points. The barometer is still well below the 50 point mark, above which it signals growth.
“The purchasing managers’ index was clearly disappointing with the unexpected decline and so the question marks about the economic dynamics in the sector are growing again,” said Helaba analyst Ralf Runde. “The scenario of bottoming out cannot yet be shelved.” The US construction sector also performed unexpectedly poorly. Construction spending fell 0.2 percent in January, the Commerce Department said. However, experts had expected a plus of 0.2 percent, after an increase of an upwardly revised 1.1 percent in December.
Already a clear minus in January
US companies had already unexpectedly reduced their production in January. Total manufacturing from industry, utilities and mining combined fell 0.1 percent. If you look at manufacturing in the US industrial sector alone, production even fell by 0.5 percent. Experts had expected a plus of 0.3 percent. In December, production stagnated according to downwardly revised data.
The US Federal Reserve has kept the key interest rate in the range of 5.25 to 5.50 percent after a phase of sometimes sharp increases. In their interest rate outlook for 2024, the monetary authorities had announced a total of three steps downwards – i.e. a reduction in interest rates by 0.75 percentage points. They will present an updated outlook at the March meeting.