Sluggish Manufacturing Growth Sparks Fears For US Recovery

05 September 2002

America’s manufacturing sector is struggling to recover from July’s surprise slowdown, with the latest data sending stock markets tumbling.

The manufacturing activity barometer of the Institute for Supply Management registered 50.5 in August, marginally above the 50.0 threshold between expansion and contraction. The reading is the same as in the previous month, when the index fell from 56.2 in June.

The future does not look too rosy either – the measure of new orders dropped from 50.4 in July to 49.7, the first time this index has fallen below the all-important 50 mark since November. Also, the barometer of employment continued to show a decline, though the rate of contraction slowed slightly from 45 in July to 45.8.

Nevertheless, there were some positives: August was the seventh month in a row in which the overall index scored above 50, while the barometer of production registered 55.6 (albeit down from 55.7 in July).

Needless to say, the markets dwelt on the negatives, with fears that the recovery is faltering sending the Dow Jones Industrial Average down over 270 points on Tuesday.

Data sourced from: multiple sources; additional content by WARC staff