US manufacturers are having a tough start to 2016 as weak global demand and strong dollar drag on exports
The first month of 2016 was not a good period for factories in the US, according to survey data released today.
Markit's purchasing managers' index – compiled from a survey of manufacturers – edged up to a score of 52.4 in January. While it is above the 50 mark that indicates no change in activity on the previous month, it is low compared with growth rates usually seen during periods of economic growth.
A separate, but similar, survey from the Institute for Supply Management (ISM) came in at a score of 48.2. It was up from the previous month's 48, but suggested that the sector had contracted for the fourth consecutive month.
ISM said that despite the rise in the PMI from December, the rate of hiring and the rate of increase in exports both fell sharply. However, new orders and imports rose.
The manufacturing sector makes up just over 10 per cent of US economic output.
"Despite picking up slightly, the January PMI reading is one of the worst seen over the past two years, highlighting the ongoing plight of the manufacturing sector," said Markit chief economist Chris Williamson.
“The manufacturing sector continues to struggle against the headwinds of weak global demand, the strong dollar, slumping investment in the energy sector and rising financial market uncertainty, all of which mean the goods-producing sector looks set to act as a drag on the wider economy again in the first quarter of 2016."