US manufacturing contracted in February. The world’s largest economy’s us manufacturing sector shrank amid job cutsโto the lowest level in seven months. There are signs, however, that the manufacturing sector will turn around.
The Institute for Supply Management (ISM) said in a Reuters news report that stocks of goods reserved for consumers fell for three consecutive months in February. However, ISM feels that this situation is not bad at all. This is a sign that stocks or customer purchases will increase in the future. Along with that, the producers of the country are also speaking in the same tone. Many say demand is finally picking up. Many have already said that sales have increased.
Shannon Grein, an economist at U.S. Wells Fargo Bank, told Reuters, “We’re seeing signs of optimism — the us manufacturing sector is picking up steam.”
The ISM said the PMI or Purchasing Managers’ Index for the manufacturing sector fell to 47.1 in February; In January which was 49.1. With this, the PMI index of the United States is below 50 for 16 consecutive months. This means that the manufacturing sector has contracted. The country’s manufacturing sector is now experiencing its longest contraction since August 2000 to January 2002.
A Reuters poll of economists had expected the index to rise to 49.5 in February. Generally, a PMI component reading of 45 or below indicates that the overall manufacturing sector is weak.
The ISM also said that if the overall PMI value falls below 42.5, the economy as a whole is in contraction mode. Earlier, this value was considered to be 48.7, that is, if it goes below, it should be assumed that the economy is in contraction. It has now been reduced to 42.5. But the economy continues to expand. In the fourth quarter of the year it expanded by 3.2 percent over the same period of the previous year.
Policy interest rates have been rising in the US to combat high inflation for nearly two years. This has increased the interest rate on loans in the country and consequently the demand for the product in the market has decreased. The ISM painted a slightly more pessimistic picture of the manufacturing sector, Reuters reported. The share of the manufacturing sector in the country’s economy is only 10.3 percent.
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