Manufacturing In U.S. Grew At Slowest Pace For Over A Year In May
Data just released in the U.S. shows that manufacturing in the country grew at the slowest rate in over a year and that employers hired fewer workers than expected, causing share prices to drop on worries that the largest economy in the world will continue to slowdown throughout the 2nd quarter of 2011.
The Institute for Supply Management`s factory index dropped more than forecast to 53.5 points last month, the lowest reading since September 2009 from 60.4 points in April. According to ADP Employer Services, companies added 38,000 workers to payrolls which is the fewest in 8 months.
Yields on 10 year Treasuries dropped below 3% for the first time in 2011 as the latest data combined with the reports showing the weakness in consumer and business spending points to the U.S. economy struggling. This latest data supports Federal Reserve policymakers who have argued that the economy is too weak to withdraw any stimulus packages.
Carl Riccadonna, a senior economist at Deutsche Bank Securities Inc. based in New York said, “It’s a confluence of headwinds hitting the economy.In this recovery, the pace of economic activity is slower, and that makes the economy more vulnerable to these types of headwinds.”
Oil is closing in on $100 barrel as parts disruptions out of Japan following March`s earthquake and tsunami weigh on global expansion, with the purchasing manager`s index in China highlighting the slowing pace of expansion.
According to Commerce Department figures the U.S. economy began 2011 on a weaker note, growing at a 1.8 percent annual rate in the first three months of this year after expanding at a 3.1 percent pace in the fourth quarter. According to the President of the Bank of New York, William C. Dudley, the slowdown will “probably prove temporary,” with the impact of rising commodity prices on inflation to be “transitory.”