The US Economy is not as Strong as it Seems

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family with new car

family with new carDepending on which financial indicator you consider, the US economy is either improving or slowing down. While there’s a lot to be hopeful for in terms of jobless figures, if you look at US manufacturing data, the US economy is looking like it is slowing down. According to the recent figures from the Institute for Supply Management, February 2015 manufacturing figures showed that while manufacturing growth is still increasing; the rate of growth is slowing down.

How bad has it slowed down? According to the ISM figure, it’s getting closer to a flat line. The Purchasing Managers Index slid by 0.6% to 52.9%. In terms of new orders, the new figure is 52.5%. This shows a decrease of 0.4%. In terms of production index, the erosion is even bigger. That index fell by 2.8%. Now it stands at 53.7%. As far as employment is concerned, that too fell by 2.7%. Now it stands at 51.4%. To make matters worse, inventories of raw materials increased. As you probably already know, increasing inventories is a bad signal.

Put all these factors together and it shows that manufacturing growth is slowing down in the United States. If this continues, then it can undermine the overall strength of the US economy. However, keep in mind that the biggest portion of the US economy is the service industry. That is showing no signs of slowing down. While manufacturing is important, it’s only one part of the picture. To come to a full conclusion that the US economy is truly weakening, there have to be other sectors slowing down. A slowdown in the manufacturing sector in of itself is not going to be enough.

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