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US manufacturing takes a dive

08-11-2011
by 
in 

The US manufacturing industry slumped in October, largely as a result of cooling global demand.

The Institute for Supply Management's factory index dropped to 50.8 last month from 51.6 in September, according to the group's latest data.

Fifty is the dividing line between growth and contraction.

Manufacturing also weakened in China and the UK during October – partly a reflection of Beijing's efforts to cool its economy and Europe's debt crisis.

A Chinese factory index dropped to the lowest level since February 2009, while a UK manufacturing gauge declined to a 28-month low.

Meanwhile, Federal Reserve policy makers are expected to meet soon to determine if more monetary easing is needed to spur manufacturing demand.

Senior US economists are concerned that manufacturing in Europe and China are showing signs of softening, which could potentially impact on the US.

The economists warn that the US will now likely struggle to surpass third-quarter GDP growth.

Estimates for the manufacturing index from 85 economists ranged from 50.5 to 55. A reading above 42.5 generally indicates an expansion in the overall economy.

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