US manufacturing sector slows as coronavirus looms
The US manufacturing sector slowed in February, a survey has shown, as new orders fell and coronavirus hung over factories.
The Institute for Supply Management (ISM)’s index of factory activity fell to 50.1 last month from 50.9 in January. The reading was below expectations and only just above the 50 figure that denotes expansion.
“Demand slumped,” said ISM chair Timothy Fiore. He said the gauge “remained in expansion territory, but at a weak level”.
Many supplier managers who responded to the survey aired their fears over the coronavirus outbreak, which has now killed nearly 3,000 people and infected more than 80,000, the majority in China.
One respondent from the computer and electrics industry said: “Coronavirus is wreaking havoc on the electronics industry. Companies are delayed in starting up production, which is resulting in longer lead times, constraints and increased.”
Another in the metal products sector said: “Coronavirus continues to be front and center as a major supply chain risk to our company.”
The US manufacturing sector makes up roughly 10 per cent of the economy. It struggled in 2019 as President Donald Trump waged a trade war with China, denting global demand.
It now faces the new headwind of the coronavirus outbreak, which has hurt demand while also disrupting supply chains.
Markets have been rocked by the outbreak. However, following their worst week since 2008, US stocks opened higher today after central banks around the world pledged to support their economies.
The weaker-than-expected ISM reading led them to pare their gains, however. Wall Street’s S&P 500 stood 0.1 per cent lower about an hour after the bell, while the Nasdaq was down 0.2 per cent. The Dow Jones remained 0.3 per cent higher.