(Photo: REUTERS)
U.S. manufacturing growth slowed significantly in the month of January as new order growth plummeted by the largest drop seen in 33 years, driving overall factory activity to an 8-month low, an industry report showed on Monday.
The much weaker-than-expected reading sent U.S. equity markets sinking deep into the red, as manufacturing growth has nearly stalled in the United States.
The Institute for Supply Management (ISM) said its index of national factory activity fell to 51.3 last month, to its lowest level since May 2013, from a recently revised 56.5 in December.
January’s figure was also well below the economists’ forecast of 56 polled by Reuters, missing even the lowest estimate of 54.2. Readings above 50 point to expansion, while those below indicate contraction.
The January reading marked a second straight month of slowing growth from November’s recent peak reading of 57, which had been the highest since April 2011, suggesting the economy may once again be losing some of the steam some thought it may have had coming out of the second half of 2013.
Throughout his presidency, President Obama has been plagued by an economy that seems to be expanding, only to reverse course in the following quarter.
The biggest concern in the ISM report was the huge drop in the forward-looking new orders index, which fell to 51.2 from 64.4 in December. That 13.2-point drop was the largest monthly decline in that key component since December 1980.
Indicators of employment, production and inventory growth also declined from December. At 52.3, the employment reading was the weakest since June and well below December’s 18-month high of 55.8.
However, the prices index surged to 60.5 from 53.5, the highest reading since last February, suggesting overall cost is increasing.
UPDATE: February is off to a terrible start. Wall Street experienced a heavy sell-off today, as the Dow shed 326 points and the S&P 500 plummeted 2.3 percent fueled by weak global factory sector data and instability in emerging markets.
In addition to the report on U.S. manufacturing growth, an official reading on China’s manufacturing sector showed the factory sector in the world’s No. 2 economy is anemic. The PMI gauge came in at 50.5 in January from 51 in December.
January was a tough month. The S&P 500 slid 3.6 percent in the broad market average’s worst month since May 2012 and its worst January since 2010.
The Dow Jones Industrial Average fell 326 points, or 2.1%, to 15373, the S&P 500 shed 40.7 points, or 2.3 percent, to 1742 and the Nasdaq Composite dropped 107 points, or 2.6 percent, to 3996.
January was a tough month for Americans’ 401Ks. The S&P 500 shed 3.6 percent in the broad market average’s worst month since May 2012 and its worst January since 2010.
The drop was fueled by worries about intense volatility in emerging-market currencies, coupled with increasing trouble in China.
