Nation and World News

top news | u.s. | world | business | sports | health | tech | arts | search AP |
Oct 1, 11:19 AM EDT

US manufacturing barely expands as global economy slows

AP Photo
AP Photo/Rick Bowmer

Latest Business News
Glencore cutting back zinc metal production

Gap shares fall on disappointing sales at Banana Republic

Figures on government spending and debt

Domino's and Netflix are big market movers

Average US rate on 30-year mortgages falls to 3.76 percent

A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Puerto Rico to restructure Education Department amid crisis

Clinton seeks crackdown for those breaking Wall Street rules

Egypt's foreign reserves fall as devaluation expected

Bank of England keeps interest rates unchanged

German economic think-tanks lower 2015 growth forecast

NY comptroller: Wall Street profits hit $11.3B in 6 months

IMF downgrades forecast for world, emerging market economies

US services growth slows in September as orders plunge

World Bank trims East Asia growth forecasts

Job growth in retail and professional services accelerates

Buy AP Photo Reprints
Interactive about job growth
Quiz for Older Job Seekers
Who Has Lost the Jobs? A State by State Look
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

WASHINGTON (AP) -- U.S. manufacturers expanded at their slowest pace in two years last month, held back by faltering global growth and cutbacks in oil and gas drilling.

The Institute for Supply Management said Thursday that its index of factory activity fell sharply to 50.2 in September from 51.1 in August. That is the lowest level since May 2013. Any reading above 50 indicates expansion.

New orders and production both fell sharply and a measure of hiring also declined, according to the ISM, a trade group of purchasing managers. All three measures still barely remained in expansion territory.

U.S. manufacturers are getting hit by slower growth in China, the world's second-largest economy, and a stronger dollar, which makes U.S. goods more expensive overseas. The 15 percent rise in the dollar's value in the past year has also made imports cheaper compared with U.S.-made goods. Oil and gas drillers are also cutting back on their orders for steel pipe and other equipment in the wake of sharply lower oil prices.

The report "is yet another illustration of the devastating impact that the strong dollar and weak foreign demand is having on the battered factory sector," Steve Murphy, an economist at Capital Economics, said. "Things might well get even worse before they begin to get better. Nevertheless, the ... incoming data on the rest of the economy are still incredibly upbeat."

Sales of existing homes reached an eight-year high in July before slipping in August. Americans are also getting more confident in the economy and consumer spending has been solid. The number of people seeking unemployment benefits is near a 15-year low.

Yet China's factory activity contracted again last month, according to a survey of its purchasing managers. Its manufacturing index inched up to 49.8 from 49.7 in August.

Bradley Holcomb, chair of the ISM's survey committee, said that uncertainty around precisely how badly China's economy is slowing, and about the Federal Reserve's next moves, are also weighing on manufacturers.

The weakness was widespread. Only seven industries out of 18 tracked by the index actually reported growth, including printing, textiles, furniture, food and beverages, paper products and minerals. The 11 that shrank included steel and other metals, clothing, oil and coal products, wood products, electrical equipment and appliances, machinery, and computers.

Manufacturers cut 15,000 jobs last month, the most in five years, payroll services provider ADP said Wednesday. The government will release its jobs report Friday, and economists forecast it will show that the economy added 206,000 jobs overall. The unemployment rate is expected to remain at a seven-year low of 5.1 percent.

Most economists expect U.S. manufacturing will do little for the economy for the rest of the year, with the possible exception of automakers. But so far, healthy consumer spending on cars, homes and restaurant meals is offsetting overseas weakness and driving modest growth.

© 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.