U.S. Manufacturing Production Declined in September
October 17 2019 - 9:45AM
Dow Jones News
By Sarah Chaney and Amara Omeokwe
U.S. manufacturing production fell in September for the second
time in three months, suggesting trade frictions and slowing global
growth are denting a key segment of the U.S. economy.
Manufacturing output, the biggest component of industrial
production, fell 0.5% in September from a month earlier, the
Federal Reserve said Thursday. Production at factories was dragged
down by a strike at General Motors, the Fed said. Excluding autos,
manufacturing output was still down 0.2% last month, suggesting
broader based weakness in goods production.
Overall industrial production, which includes output at
factories, mines and utilities, dropped 0.4% in September, due to
both faltering manufacturing and mining activity.
The U.S. is a service-oriented economy, meaning manufacturing
accounts for a small share of gross domestic product. Still, the
sector is highly sensitive to swings in global demand, making it an
important indicator of broader economic shifts.
Underlying domestic demand in the U.S. economy has flashed signs
of slowdown recently, with both consumers and employers showing
hesitance. Retail sales declined 0.3% in September from a month
earlier, and job openings declined 4% in August from a year
earlier.
A loss of momentum in U.S. manufacturing aligns with weakening
factory output overseas.
The manufacturing output index in Germany, a key export economy
in the Eurozone, fell to 101.5 in August from 105.8 a year earlier,
Organization for Economic Cooperation and Development figures
show.
Surveys of purchasing managers across the globe pointed to
deepening declines in factory activity in September. The U.S. was
not immune. The Institute for Supply Management's survey of
supply-chain managers showed manufacturing activity contracted for
the second straight month to the lowest level since 2009.
Faltering manufacturing activity across the global economy is
squeezing broader economic growth. Global growth is expected to
fall to 3% this year, according to new estimates from the
International Monetary Fund, down from an estimate of 3.2% in July
and a 3.8% pace as recently as 2017. The IMF attributed the sharp
slowdown over the past two years primarily to rising trade barriers
that have stunted manufacturing and investment around the
world.
Write to Sarah Chaney at sarah.chaney@wsj.com and Amara Omeokwe
at amara.omeokwe@wsj.com
(END) Dow Jones Newswires
October 17, 2019 09:30 ET (13:30 GMT)
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