6/01/2011

More on the anemic recovery: US Manufacturing stuck in stop

Housing, unemployment, manufacturing are all looking pretty bad.

The pace of growth in the U.S. manufacturing sector tumbled in May, slackening more than expected to its slowest since September 2009, according to an industry report released Wednesday.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 53.5 in May from 60.4 the month before. The reading missed economists' expectations for 57.7.

A reading below 50 indicates contraction in the manufacturing sector, while a number above 50 means expansion.

New orders fell to 51.0 from 61.7 in April, the lowest since June 2009. The index for prices paid fell to 76.5 from 85.5, below expectations of 82.0. . . .


On top of that planned layoffs are up.

U
.S. private-sector payroll growth slowed sharply in May, falling to the lowest level in eight months and prompting some economists to lower forecasts for job growth in Friday's U.S. government report. . . .

The ADP report showed private employers added a scant 38,000 jobs last month, falling from a downwardly revised 177,000 in April and well short of expectations for 175,000. It was the lowest level since September 2010.

The report boded poorly for the key U.S. non-farm payrolls report at the end of the week. Credit Suisse lowered its estimate for Friday's employment number to 120,000 from its previous forecast of 185,000 and its private payroll estimate to 135,000 from 200,000.

ADP's number has been weaker than the government's private payrolls figure for 12 of the last 14 months, making Friday's government numbers likely to come in above ADP's report, Credit Suisse said. . . .

A separate report showed the number of planned layoffs at U.S. firms rose modestly in May with the government and non-profit sectors making up a large portion of the cuts.

Employers announced 37,135 planned job cuts last month, up 1.8 percent from 36,490 in April, according to a report from consultants Challenger, Gray & Christmas.

"Most employers realise that these types of ups and downs are typical during recoveries. So, it is unlikely that we will see a sudden resurgence in corporate downsizing in the months ahead, unless there is a major shock to the economy," John Challenger, CEO of Challenger, Gray & Christmas said. . . . .

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