Business

US manufacturing contracts for fourth month in a row

WASHINGTON : United States factory activity contracted for a fourth straight month in November as new orders slumped back to around their lowest level since 2012, while construction spending fell in October, tempering optimism over the economy that had been fanned by a recent run of upbeat reports.

The data on Monday led the Federal Reserve Bank of Atlanta to slash its gross domestic product (GDP) estimate for the fourth quarter.

The Atlanta Fed had only last Wednesday boosted its growth estimate by a whopping 1.3 percentage points in the wake of encouraging news, including a sharp drop in the goods trade deficit in October and a strong rebound in a proxy of business spending on equipment.

The Institute for Supply Management (ISM) said its index of national factory activity dropped 0.2 point to a reading of 48.1 last month. A reading below 50 indicates contraction in the manufacturing sector, which accounts for 11 per cent of the US economy.

Though the ISM said business sentiment had improved relative to October, likely as the US and China inched towards a partial trade deal, November's reading marked the fourth straight month that the index remained below the 50 threshold. - REUTERS

BUSINESS & FINANCE