The persistent decrease in American manufacturing sectors persists.
American industry experienced a minor recovery in August, but still grappled with its downward trend. The Institute for Supply Management (ISM) reported a minimal increase of 0.4 points to 47.2 in the sector's purchasing managers' index. Regrettably, this figure still fell short of the 50-point threshold that signifies growth. Economists surveyed by Reuters had anticipated a rise to 47.5 points.
The industry is facing challenges due to the sluggish international economy and the tight monetary policy adopted by the U.S. Federal Reserve, which hinted at a potential interest rate reduction. "The surge in the purchasing managers' index marks a reversal of four consecutive declines," commented Helaba analyst Ulrich Wortberg. "The anxiety surrounding a potential slowdown in the industry's economic progress may subside somewhat."
On the downside, the U.S. construction industry also reported unfavorable news. The Commerce Department disclosed a 0.3% decrease in construction spending for July. Economists had anticipated a lesser decrease of 0.1%, after June's revised stagnation. The construction sector is also affected by the Federal Reserve's tight monetary policy, as mortgage rates have increased. The Federal Reserve last maintained interest rates between 5.25% and 5.50%.
However, the prediction is for an interest rate reduction in September, which is expected to stimulate construction activities. "Publications about a rate reduction should stay prevalent, but it's not projected to intensify further," reiterated Ulrich Wortberg, a Helaba analyst.**
The current low interest rates, although anticipated for a reduction in September, haven't significantly lowered mortgage rates, continuing to pose a challenge for the construction sector. Despite the minimal increase in the purchasing managers' index, the industry's growth remains below the low 50-point threshold.
