US Manufacturing Growth Slows
October 1, 2007
The growth of the US manufacturing sector has slowed down over the month of September with output and demand for fresh orders down on the month according to official figures released today.
The figures released today by the Institute for Supply Management on its national factory activity index was down from just under 53 a whole point to 52.0 over September, reflecting an overall deceleration in the manufacturing sector as was widely predicted by market analysts for the period.
Whilst any figure beyond fifty on the index shows that the sector is in growth, analysts have taken today’s fall to be indicative of a more hostile economic climate, which has been seen to be a direct result of the sub-prime crisis and the lending market fallout.
The Federal Reserve had said that they would be taking a number of important economic indicators very seriously in considering their approach to setting interest rate policy in the near future to keep the economy on track.
As a result, markets have been buoyed on the promise of further cuts as a result of weak data, which rather unfortunately has been in abundance from the US as of late.
The news had an adverse impact on the value of the dollar, with traders fearing it could be sufficient to seal another interest rate cut when the Federal Reserve next meet to decide interest rate policy.
With the euro now seeming the currency of choice, investors fled further from the dollar to avoid what was seen as the inevitable devaluation when rates are further cut.
Additionally trade on the main US exchange the Dow Jones was adversly effected by the news, which was taken to be a sign of the wider economic impact of the sub-prime lending sector collapse. However soon after trade recovered on the hope that rates would again be cut, thus boosting economic growth, closing up through the 14,000 barrier for the first time in months.
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