US factory activity caps its worst quarter in 3 years
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US manufacturing ended its worst quarter in three years in September as foreign demand for US goods fell sharply, an industry survey showed on Monday.
The final Markit US Manufacturing Purchasing Managers Index (PMI) fell to 51.1 in September from 51.5 in August, and averaged 51.4 in the third quarter. Both the monthly and quarterly readings were the lowest in three years.
A reading above 50 indicates expansion. The index's reading for the manufacturing sector's output fell to 50.6 from 51.9, also a three year low, while employment slipped to 51.9, the lowest reading since 51.1 in December of 2010. Indicators suggest manfacturing production and employment could be on the verge of contracting, meaning that the sector is now likely to be acting as a drag on the wider economy, said Chris Williamson, Markit chief economist.
The US economy grew at a 1.3 percent pace between April and June, but Williamson said manufacturing weakness could contribute to an even slower rate in the third quarter. As indicated in Markit's preliminary reading last month, manufacturers were hurt by weaker demand overseas, with new orders for exports slipping at their fastest rate in 11 months.
Euro zone: Back to '08
Euro zone manufacturing put in its worst performance in the three months to September since the depths of the Great Recession, with factories hit by falling demand despite cutting prices, a business survey showed on Monday ó pointing to a new recession.
Factories helped lift the 17-nation bloc out of its last recession but the survey suggests a downturn that began in smaller periphery countries has taken root in core members Germany and France.
Despite seeing some easing in the rate of decline last month, manufacturers across the euro area suffered the worst quarter for three years in the three months to September, said Chris Williamson, chief economist at data collator Markit.