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U.S. manufacturing contracted for second straight month

Staff writer ▼ | January 6, 2016
U.S. manufacturing activity contracted for the second straight month in December as a strong dollar, a weak global economy and low oil prices continued to hamper the industry.
US manufacturing
USA   An index of factory activity fell to 48.2
An index of factory activity fell to 48.2 from 48.6, the Institute for Supply Management said. That's the lowest level since June 2009. A reading above 50 means the sector is expanding; below 50 indicates contraction. Economists expected a rise to 49.

The November measure marked the first time in three years that the industry shrank.

A lofty dollar has made U.S. goods more expensive overseas, compounding the struggles of manufacturers that also have been hurt by sluggish growth in regions such as China and the euro zone. A weaker than expected reading on Chinese manufacturing that sent markets tumbling could portend further troubles for U.S. producers.

The plunge in oil prices has depressed energy company investment and demand for steel pipes and related products. Manufacturers and their customers are also drawing down bloated inventories, lessening the need to churn out new products. An index of customer inventories rose to 51.5 from 50.5 last month, suggesting that stockpiles are still swollen.

A booming auto industry and the housing rebound has partly offset the pain for the nation's factories.

The production index rose to 49.8 from 49.2. And a measure of new orders, a barometer of future output, increased to 49.2 from 48.9.

But the employment index fell 3.2 and into contraction territory at 48.1, an indication that manufacturing may post job losses again in Friday's closely watched payroll report. Supplier deliveries fell modestly to 50.3.