The US economy grew at a slower rate than originally believed in Q3 of 2015. As more comprehensive data became available, the GDP figure was revised down from 2.1 to 2%, but growth in the quarter still beat analyst expectations of 1.9%.
As if to underline the fact that the economy in the US is not as buoyant as previously believed, the latest Institute for Supply Managers’ Index shows that the contraction in the manufacturing sector is continuing and deepening. The reading for December came in at 48.2, down from 48.6 in November. On this scale, a reading above 50 denotes expansion and a value below 50 contraction. The fact that the number is getting smaller show that the decline in the sector is worsening. Indeed, the fall in the sector is the worst seen for six years.
According to the Institute for Supply Management, the fall off is due to a combination of factors including a strong Dollar, making US exports less competitive in importing markets in comparison to comparable goods from competing nations and generally weak global demand. The weak oil price has been blamed for weakness in parts of the steel manufacturing industry that specialise in drills and components for the oil exploration and production industries as low prices cause more expensive exploitation and prospecting activities to be mothballed.
According to the US Commerce Department, spending on construction activities in the US fell by 0.4% in November, marking the first reduction seen in the sector for 18 months. The fall is the biggest decline within the construction sector since June 2014. The construction sector is an important component of the US economy and recovery within the sector was seen as a bellwether for general sentiment in the wider US economy – people and businesses only engage in new construction when feeling optimistic about future prospects, as a rule.