American Factory Output Slides To Slowest Growth Rate Since May 2013

Growth for American factories hit its lowest level since May 2013, according to a report issued on Tuesday by the Institute for Supply Management (ISM), a trade group focused on supply management. The report said that the purchasing managers’ index, which reflects manufacturing, slid to 51.1 percent in August from 52.7 percent in July.

The numbers run counter to the improvement that economists had been expecting in August, according to the Associated Press. China’s economic slowdown, declining crude oil prices and a strong U.S. dollar have all contributed to the slower pace of American manufacturing growth. In addition, the strong U.S. dollar has made American goods more expensive on international markets.

The six industries that reported contractions were apparel, leather and allied products; primary metals; electrical equipment, appliances and components; petroleum and coal products; computer and electronic products; and transportation equipment, according to the report. Ten of 18 manufacturing industries reported growth in August, according to the report.

The report also said that growth of raw material inventories decreased by one percentage point from July to 48.5 percent for August. The prices for raw materials dropped for the 10th month in a row.

Bradley Holcomb, chairman of ISM’s manufacturing survey committee, told the AP that global market fluctuations impact American manufacturing. “China, in the same fashion, does impact us both emotionally and directly,” he said.

The impact of China’s economic uncertainty could hit American manufacturing into next year, experts said. In an interview with MarketWatch, economist Joshua Shapiro noted that the August results raise a warning flag about real economic growth, "particularly should the weakness be sustained in September.”

Overall, the American economy grew for the 75th month in a row, according to the report. U.S. unemployment stands at 5.3 percent, a seven-year low. The AP reported that the U.S. Commerce Department said the American economy grew 3.7 percent from April to June.