US Manufacturing & Construction Shrink UNEXPECTEDLY

[wbcoleman]

US Manufacturing, Construction Spending Shrink Unexpectedly
Published: Tuesday, 4 Sep 2012 | 10:09 AM ET Text Size
By: Reuters

http://www.cnbc.com/id/48894306

U.S. manufacturing shrank at its sharpest clip in more than three years in August while U.S. construction spending in July fell by the most in a year, new reports showed on Tuesday.

The Institute for Supply Management said its index of national factory activity fell to 49.6 in August from 49.8 in July.

The reading fell shy of the 50.0 median estimate in a Reuters poll of economists. A reading below 50 indicates contraction in the sector.

The index's employment component fell to 51.6, the lowest since November 2009, from 52.0 in July.

New orders, a forward-looking sub-index, fell to 47.1 in August, the worst showing since April of 2009. It stood at 48 in July.

The exports index ticked up to 47 last month from 46.5 in July but remained in contraction territory as recession in parts of Europe and slower growth in Asia sapped demand for U.S. goods.

Construction Spending Drops Off

U.S. construction spending in July fell by the most in a year as both the private and public sectors cut back on investment, according to a report that could dampen hopes of a pick-up in economic activity in the third quarter.

Construction spending dropped 0.9 percent to an annual rate of $834.4 billion, the lowest level since April, the Commerce Department said on Tuesday. The decline was the first since March and followed an unrevised 0.4 percent rise in June.

Economists polled by Reuters had expected construction spending to rise 0.4 percent in July.

The report could put a damper on optimism that the economy fared slightly better early this quarter after growth slowed to a 1.7 percent annual pace in the April-June period.

Data on job growth, housing and consumer spending has been fairly upbeat, but economic activity remains constrained by fears of higher taxes and sharp cuts in government spending in January and the ongoing debt crisis in Europe, which are eroding confidence.

Construction spending fell across the board in July, with steep declines in private outlays. Private construction dropped 1.2 percent, also the largest decline since July last year.

Private nonresidential construction spending slipped 0.9 percent, while outlays on residential projects dropped 1.6 percent.

Spending on public sector construction dipped 0.4 percent. Outlays on federal government projects fell 1.3 percent, dropping for a second straight month.

Spending on state and local government projects slipped 0.3 percent, breaking three straight months of gains.

[kentay]

The report adds to other signs that manufacturing is struggling around the globe.

The report followed other data showing manufacturing has slowed overseas. A measure of factory activity in China fell to its lowest level in more than three years last month. And manufacturing in Europe has also stagnated in the face of the region's financial crisis.

U.S. factories have been a key source of jobs and growth since the recession ended in June 2009. But the sector has shown signs of weakness in recent months.

The ISM survey showed factories kept hiring in July but at a slower pace. And production dropped sharply to 47.2.
Factories reported less demand in the spring after consumers cut back on spending and businesses invested less in machinery and equipment. Some worried that manufacturing could weaken further in coming months if Europe's financial crisis and slower global growth cut demand for U.S. exports.

Recent data suggest the economy picked up a little in July, which could boost factory production in the second half of the year. Employers added 163,000 jobs, the best hiring since February. And consumers stepped up spending last month after earning a little more.

[wbcoleman]

Personally, I am worried silly about Europe.  I think a collapse there would indeed have worldwide consequences.

[Ted S]

Unexpectedly?  This may be unexpected for some people but bad economic news to not surprising to some of us.

[clistensprechen]

Personally, I am worried silly about Europe.  I think a collapse there would indeed have worldwide consequences.

This statement makes you a rarity among conservatives who don't care about Europe except as use as a scare tactic.  It already has had global consequences to the point of turning around that old Wall Street adage, "when Wall Street catches a cold, the world catches pneumonia".  Europe has caught pneumonia and Wall Street fears for its life.

[Ted S]

Europe has caught pneumonia and Wall Street fears for its life.

That's why the USA shouldn't be following in the footsteps of Europe.  Sadly, that's what Hope and Change is all about.  Obama HOPES we CHANGE into a European style social democracy.

I hope we change leadership.

[clistensprechen]

Europe has caught pneumonia and Wall Street fears for its life.

That's why the USA shouldn't be following in the footsteps of Europe.  Sadly, that's what Hope and Change is all about.  Obama HOPES we CHANGE into a European style social democracy.

I hope we change leadership.

I submit that your leap into thinking that you know Obama's brain is a leap to one bridge too far.  The EU expressly intended, in the 1990's, to go into head-to-head competition with the U.S. not only in terms of trade but in terms of establishing the Euro as a petroleum trade benchmark, so there's no chance that Obama is even thinking in those terms.

[clistensprechen]

I should add that the global market has initiated a concerted effort to use U.S. economic playbook in order to usurp U.S. market supremacy only to discover--as we Americans have--that U.S. market supremacy involves fraud.  The world market got defrauded by Wall Street and thus there is no escape for either the U.S. or Europe--we're all in the same "toxic assets" (read "moneypit") boat.

[wbcoleman]

Europe has caught pneumonia and Wall Street fears for its life.

That's why the USA shouldn't be following in the footsteps of Europe.  Sadly, that's what Hope and Change is all about.  Obama HOPES we CHANGE into a European style social democracy.

I hope we change leadership.

ted, I agree but I also agree with clara.  I wasn't trying to make a political point when I brought up Europe.  Frankly, if a Euro crisis explodes in the next month or two, Obama could pay the price, even though he has very little personal responsibility for it.

[Ted S]

ted, I agree but I also agree with clara.  I wasn't trying to make a political point when I brought up Europe.  Frankly, if a Euro crisis explodes in the next month or two, Obama could pay the price, even though he has very little personal responsibility for it.

Agreed.  Obama didn't create the social democracy that Europe enjoys, or suffers, depending on your point of view, but he can faulted for attempting to transform the USA into the image of Europe.  Or put another way; if the car ahead of you just drove off a cliff, yeah, it's not your fault, but if you continue to follow him, that's your fault.

[clistensprechen]

{statement withdrawn}

[wbcoleman]

I was quoted as saying "I hope we change leadership" when I said no such thing.  Guys, please fix your posts. Thank you.

You were not.  ted was speaking for himself when he wrote that, and I made clear that I wasn't trying to make a political point with respect to Europe.

[Ted S]

I was quoted as saying "I hope we change leadership" when I said no such thing.  Guys, please fix your posts. Thank you.

I try pretty hard to make sure I quote others properly.

As WBC said, those were my words, not yours.

[clistensprechen]

Thanks guys--statement withdrawn. Carry on.

[RWE]

....  The EU expressly intended, in the 1990's, to go into head-to-head competition with the U.S. not only in terms of trade but in terms of establishing the Euro as a petroleum trade benchmark, so there's no chance that Obama is even thinking in those terms.

I submit that your leap into thinking that you know Obama's brain is a leap to one bridge too far.