As a massive snowstorm descended on eastern US, companies in Virginia’s manufacturing sector poured on the cold weather in a show of support for their workforce.
US business activity cooled in November as manufacturing production and orders declined, a sign of weakness in a sector that is key to Washington’s push to overhaul the tax code.
Industrial production in the US fell 0.1 per cent last month, slightly below the expected 0.2 per cent decline, a report from the Federal Reserve showed on Monday.
Factory production in the US dropped 0.5 per cent, with a 1.2 per cent decline in the auto sector offsetting growth in the energy sector.
“The headline number was a little disappointing,” said Joseph LaVorgna, chief US economist at Deutsche Bank. “It’s not the worst number but I didn’t think it would come in 0.1 per cent worse than expected. It’s a matter of is there some secular weakness in manufacturing.”
Earlier, factory orders declined 0.6 per cent last month, far worse than a 0.1 per cent decline expected by economists.
Separately, the Institute for Supply Management said its measure of manufacturing activity in the US fell to a reading of 49.8 last month, the lowest reading since June 2016, and below the expected 50.1.
Meanwhile, the ISM gauge of new orders fell sharply to 48.3, falling below 50 for the first time since September 2016.
A number below 50 indicates contraction in the US manufacturing sector. A gauge of employment in the sector also fell, to 51.5, hitting the lowest reading since April 2016.
“This weaker picture in the factory sector seems to reinforce our expectations that GDP growth in the fourth quarter will have slowed to about 0.5 per cent, which is an especially disappointing result given all the good growth we’ve seen in the recent past,” said Howard Archer, chief UK and European economist at IHS Markit.
“In addition, factory output appears to have been relatively weak in November.”
In all, ISM’s measure of business sentiment fell to 56, the lowest since March, and way below the expected 62.
“A significant source of disappointment has been that survey respondents continue to be nervous about the outlook for business conditions. Such concerns are expressed in increased caution about staffing levels,” said Jack Kleinhenz, chief economist at the National Association of Manufacturers.
Car dealerships across the US were closed on Sunday to care for customers displaced by the massive snowstorm.
The weather is expected to continue to cause disruption through the rest of the day.
Meanwhile, the November construction spending numbers also came in lower than expected.
Construction spending fell 0.3 per cent, missing economists’ forecasts for a 0.1 per cent gain.