subject: Figures Indicate Slowing Down Of Both Factory Sector And Recovery [print this page] Figures are indicating that both the factory sector and recovery are slowing down. Production dropped in June as per government report. It was the sharpest fall in one year. Two indexes (regional manufacturing) dropped in July.
Data shows that production in various sectors like car making, building materials and processed food dropped last June. This caused stocks also to fall.
The Federal Reserve admitted the slowing down of the recovery in their previous months meeting. This has lowered their predictions about economic growth as per the recently released minutes of the meeting.
It was the manufacturing that had propped up the economy to start to recover in 2009. But the fall in June was the first since the last four months. Overall production in the industrial sector had picked up for this month but this was largely due to the hot weather that led to increase in demand for electrical gadgets.
Peter Newland of Barclays Capital Research said, Todays report supports the view that the manufacturing recovery lost some momentum.
The data coming in however gives a mixed picture about the recovery. The applications for benefits for unemployment dropped to 429,000 it being the lowest since 2008 August as per the findings of the Labor Department. But this was generally because of seasonal factors; for instance manufacturers did not opt for the usual shutting down during summer.
According to the Labour Department the prices of wholesale good fell it being the third month. The prices dropped because of fall in costs of energy. Food costs showed big declines the biggest since the last eight years. But except for the energy and food sectors the inflation remained more or less flat.
As per the Federal Reserves report relating to industrial output there was an increase of 0.1% in June taking into account outputs in mines, utilities and factories. It was fourth running month of gain. But factory production the biggest part in industrial output fell by 0.4%. The manufacturing indexes of Empire State and Philadelphia Fed also showed deep falls. This worsened concerns.
Economists pointed to these figures to indicate these to be further proof of the weakening economy. Brian Bethune of IHS Global Insight said, It is pretty clear that a slowdown is in process. The healing process from a severe recession is still under way. But given the kind of trauma the economy was subjected to, it isnt going to bounce back on a sustained basis right away.
