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US economy sputters in December

Manufacturing in the US has fallen to its lowest level since 2009. Ten out of 18 manufacturing industries, including apparel, machinery, primary metals and electrical equipment, reported contraction in December. The six reporting growth included textile mills, paper products and chemical products industries.

Manufacturers inventories rose slightly, but that was offset by an increase in customers’ reporting stocks of unsold goods were high. With activity weakening, manufacturers adjusted their hiring plans. The employment index fell to 48.1 in December from 51.3 in November.

Plunging crude oil prices, which have plumbed their lowest levels since 2004, have put pressure on oilfield services firms, forcing them to slash capital spending budgets. Construction spending slipped 0.4 per cent, the first and also biggest drop since June 2014, after a downwardly revised 0.3 per cent gain in October.

Economists have lowered their fourth quarter gross domestic product estimates by as much as three-tenths of a percentage point to as low as a 1.1 per cent annual pace. The economy expanded at a two per cent rate in the third quarter. Construction outlays were up 10.5 per cent compared to November of last year. Construction spending in November was held down by a 0.8 per cent drop in nonresidential construction. Outlays on residential construction rose 0.2 per cent.

 
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