U.S. factory activity rose at the slowest rate in a year in January due to declining orders, indicating that the slowdown in global markets is weighing on U.S. manufacturing industry.
The Institute for Supply Management’s gauge fell to 53.5 last month, compared with 55.1 in December. Economists surveyed by Bloomberg News had expected the figure to plunge to 54.5. A measure above 50 indicates expansion.
Declining oil prices have negatively affected sales of firms such as Caterpillar, Inc. as a stronger dollar makes American goods pricier amid global economic slowdown in key markets such as Europe and China. However, local demand is picking up as the U.S. economy continues to gain momentum after the 2008 financial meltdown.
“What we’re seeing is moderation rather than any major deterioration,” Gennadiy Goldberg, a New York-based U.S. strategist at TD Securities USA LLC, told Bloomberg News. “The weak global backdrop along with the stronger dollar is not very positive for U.S. exporters. We still have very strong domestic demand, which is a big positive.”
The ISM’s index of new orders plunged to 52.9 last month, the lowest in a year, down from 57.8 in December. This means the measure has declined nearly 10 points since October.
Elsewhere, U.K. manufacturing posted strong growth in January as China’s factory activity declined. Markit Economics said that its U.K. purchasing managers’ index rose to 53 last month from December’s reading of 52.7. The China’s government index fell to 49.8 from December’s reading of 50.1, data released on Feb. 1. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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