U.S. manufacturing sector slows; construction spending hits record high
WASHINGTON - U.S. factory manufacturing activity slowed in February as new orders contracted, reflecting worries about supply chain disruptions related to the fast-spreading coronavirus outbreak, which has revived financial market fears of a recession.
Investors worry the flu-like virus could derail the longest economic expansion on record, now in its 11th year. Federal Reserve Chair Jerome Powell on Friday described the U.S. economy’s fundamentals as “strong,” but acknowledged that “the coronavirus poses evolving risks to economic activity,” and said the U.S. central bank would “use our tools and act as appropriate to support the economy.”
A reading above 50 indicates expansion in the manufacturing sector, which accounts for 11% of the U.S. economy. The ISM said “global supply chains are impacting most, if not all, of the manufacturing industry sectors.” About six industries, including computers and electronics, fabricated metal and chemical producers, reported the coronavirus outbreak was impacting their businesses.
Apple last month warned investors it was unlikely to meet revenue targets for the first quarter of 2020 and that global iPhone supplies would be limited as manufacturing sites in China were not ramping up production as quickly as expected. The ISM’s factory employment index remained in contraction territory in February, suggesting manufacturing payrolls could remain weak after declining in December and January.
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