U.S. manufacturing growth at two-year low, ISM data show

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Saturday, 3 October 2015

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• The ISM’s new-orders gauge slipped 1.6 points to 50.2%, while the employment index edged down to 50.5%.

• American manufacturers of goods such as oil rigs, appliances and computers saw the weakest performance in September in more than two years, according to the a survey of industry executives.
• The Institute for Supply Management said its manufacturing index fell to 50.2% last month from 51.1% in August, hitting the lowest level since mid-2013. The index is hovering just barely above the cutoff mark between expansion and contraction.
• Manufacturers have been whacked by a soaring dollar, a weakening global economy and a plunge in oil prices that’s slashed demand for equipment used to extract fossil fuels. The result has been a slump in exports and reduced profit margins.
• The ISM index is compiled from a survey of executives who order raw materials and other supplies for their companies. The gauge tends to rise or fall in tandem with the health of the economy, though the smaller role of the manufacturing sector in the U.S. suggests a more limited impact. Companies in the service sector, which employs more than 80% of all Americans, is growing much faster.
• Of the 18 industries tracked by ISM, only seven said their businesses grew in September. The rest said they experienced contraction.
• “Revenue and profits in our industry continue to be impacted by low crude and gas prices,” said an executive at an energy company. And an executive at a minerals producer said “orders from our customers seem to be slowing a bit from the first part of the year.”
• Some executives said an economic slowdown in China had rattled their customers despite steady growth in the U.S. A separate Markit survey of Chinese manufacturers also released Thursday showed conditions deteriorating more rapidly than anytime since 2009.
• Manufacturers also faced strong headwinds in Canada, Japan and the eurozone, though most major manufacturers in Europe were still expanding, helped by a weaker currency.