US factory activity shrinks for sixth straight month: survey

FE Team | Published: October 02, 2024 22:53:00

WASHINGTON, Oct 2 (AFP) : US manufacturing activity contracted for a sixth straight month in September, according to survey data released Tuesday, with demand remaining weak and new export orders slumping.
The tepid reading reflects uncertainty in the sector ahead of the US presidential election in November and with further changes to central bank policy in the pipes.
Meanwhile, a deterioration in the employment index underscores concerns over the jobs market.
The Institute for Supply Management's (ISM) manufacturing index held at 47.2 percent last month, the same reading as in August, missing market expectations.
That figure is below the 50-point mark separating expansion from contraction. "Demand continues to be weak, output declined and inputs stayed accommodative," said ISM survey chief Timothy Fiore in a statement. "Demand remains subdued, as companies showed an unwillingness to invest in capital and inventory due to federal monetary policy," he said, adding that "election uncertainty" was also a factor.
While the Federal Reserve has started to lower interest rates, further action is widely expected.
Besides export orders, the new orders index also remained in contraction while employment shrunk at a faster rate.
"Panelists cited continuing efforts by their companies to right-size workforces to levels consistent with projected demand," according to Fiore.
A respondent in the chemical products sector said: "North America demand has started to weaken. Asian demand is slightly higher but shows signs of weakness in future months."
Matthew Martin, an economist at Oxford Economics, said that high interest rates and uncertainty over the US presidential election "continue to weigh on the manufacturing sector."
With the Fed set to deliver further rate cuts this year, "investment into capital and inventory should boost production in the sector," he added.