American manufacturing sector contracts fourth month in a row
Posted December 2, 2019 12:01 p.m. EST
CNN — The American manufacturing sector keeps shrinking. The trade war is heating up again. That's not a good recipe for investor confidence: The US stock market is in the red on Monday
The Institute of Supply Management reported activity at America's factories contracted for a fourth-straight month in November. The purchasing managers' index was only 48.1, compared with the economists' consensus forecast of 49.2. Any reading under 50 denotes a contraction.
So much for the fourth quarter stabilization that many economists had expected.
"Global trade remains the most significant cross-industry issue," said Timothy Fiore, chair of the Institute for Supply Management's Manufacturing Business Survey Committee.
Survey respondents cited ongoing economic uncertainty and confusion over the trade relationship with China. Some said the current conditions led them to revise their capital-spending plans.
Escalating trade-spooked manufacturers' fears. On Monday, President Donald Trump renewed the threat of import tariffs on steel and aluminum from Brazil and Argentina, citing a "massive devaluation of their currencies."
It is true that both the Brazilian real as well as the Argentine peso have fallen in value against the US dollar this year. But whether it was a case of intentional devaluation to gain an advantage in commerce is another question. The real is down 8% and the peso has plummeted more than 37%, not least because of its turbulent political and economic situation.
All this is weighing on US stocks Monday. After a slightly higher open, major stock indexes are now squarely in the red. The Dow is down 165 points, or 0.6%, while the broader S&P 500 is down 0.7%. The Nasdaq Composite slipped 1.2%.