US manufacturing sector back in recession

Monday, July 2, 2012
By Paul Martin

Larry Elliott
Guardian.co.uk
Monday 2 July 2012

Barack Obama was given an election headache on Monday when the latest health check of US industry revealed that plunging order books sent the manufacturing sector back into recession territory last month.

In a surprise to Wall Street, the monthly snapshot from the Institute for Supply Management fell below the 50 level that separates contracting from expanding output for the first time in three years.

News that the index had dropped from 53.5 in May to 49.7 in June sent shares tumbling in New York and prompted speculation that the US Federal Reserve might step in with fresh measures to boost flagging demand.

The state of the US economy is likely to be the key issue in the political race for the White House between president Obama and his Republican challenger Mitt Romney in November and Monday’s ISM survey is the latest piece of evidence to suggest that growth has slowed down since the start of the year.

The decline in June was largely the result of sharply weaker order books for US manufacturers – a hint that production will remain at low levels over the months to come.

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