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Politics : The Obama - Clinton Disaster -- Ignore unavailable to you. Want to Upgrade?

To: John who wrote (74893)	7/2/2012 1:43:55 PM
From: Hope Praytochange	1 Recommendation Respond to of 103300

By NEIL SHAH And BEN CASSELMAN The global slowdown is hitting U.S. manufacturers hard, threatening a key pillar of the recovery and fueling fears the economy is heading for a stall for the third year in a row. New figures Monday provided the latest proof that Europe's debt and banking woes and disappointing growth in China and around the globe are crimping activity in the U.S. manufacturing sector, which has been a big driver of the economic recovery that began in mid-2009. Other reports have suggested U.S. exports were much weaker than originally thought earlier this year and that corporate profits from abroad are now shrinking instead of growing. The Institute for Supply Management's index of U.S. manufacturing activity, based on surveys of purchasing managers across the country, dropped to 49.7 in June from 53.5 in May—the first signal of slowing activity since July 2009. Readings below 50 indicate contracting activity. Economists had expected a more modest drop to 52. More Economists React: 'Economy Is Going Nowhere' Sortable Chart: Activity by Country Manufacturing Slips in Asia Euro-Zone Gloom Continues Analysis: Disappoint Drop in New Orders Overseas Slowdown Weighs on U.S. Profits A measure of new orders, which provides indications about future business, fell at its fastest pace in more than a decade—dropping from 60.1 to 47.8. Exports also dropped sharply, and many of the sectors that contracted—including petroleum, plastics, and chemical products—were tied to commodities, which have been hard-hit by slowing growth in China, in particular. The darkening outlook for U.S. factories comes as signs grow that factories around the world are losing momentum. Manufacturing activity in China, the world's second-largest economy, grew last month at its slowest pace since November, while activity among euro-zone factories is contracting. That activity is slowing in sync around the world raises the risk of a deeper downturn that becomes self-reinforcing. "The U.S. is catching the slowdown already under way in Europe and China," said Paul Dales, senior U.S. economist at Capital Economics. "Overseas events appear to be prompting American firms to put orders on hold until the outlook is clearer." "Manufacturing has tapped on the brakes for one month, reflecting more uncertainty about what's coming," said Brad Holcomb, who chairs the committee that prepares the manufacturing report. Markets dropped on the news. The Dow Jones Industrial Average fell 59 points, 0.5%, to 12821, while the broader Standard & Poor's 500 stock index slipped 0.3%. The euro dropped 0.7% against the dollar to $1.2585. The gloomy economic data poured cold water on U.S. investors, who last week cheered Europe's latest efforts to quell the sovereign-debt crisis. The ISM's Mr. Holcomb cautioned against reading too much into one month's report, and noted that although the June reading suggests the manufacturing sector is contracting, it suggests the broader U.S. economy has thus far avoided falling back into recession. "We've continued to surprise many if not most with the strength and resiliency of the manufacturing sector in the United States," Mr. Holcomb said. Still, the glum news will likely fuel speculation that the U.S. Federal Reserve and other global economic policy makers, especially China, could ramp up efforts to boost the recovery by offering more stimulus in the form of lower interest rates. Separately, spending on construction projects grew in May to its highest level in nearly two-and-half years, pushed by increased home building and other private-sector spending. Construction spending increased by 0.9% in May to a seasonally adjusted annual rate of $830.01 billion, the Commerce Department said Monday. It was the highest level since December 2009. —Eric Morath and Sarah Portlock contributed to this article.