US Manufacturing Output Disapointed in August
$DIA, $SPY, $QQQ, $VXX
US factory production fell in August on cutbacks in appliances, home electronics and machinery.
This threatens the market’s hopes for a manufacturing rebound after 2 prior months of gainers.
The US Fed said Thursday factory production dropped 0.4% in August, after an increase of 0.4% in July. A broader measure of industrial output, which includes mines and utilities, also dropped 0.4%.
Manufacturers have struggled for the past 18 months with sluggish global growth, the strong Buck, and reluctance among US CEO’s to spend more on large machinery and equipment.
Machine tool orders are the 1st leading indicator of economic growth.
That lack of spending dragged down factory output 0.4% from a year ago. The slowdown has also cost about 30,000 factory workers their jobs in the past year.
Manufacturing activity is struggling to make any headway.
A 2nd report Thursday suggested the weakness may continue in September. The Federal Reserve Bank of New York said that manufacturing in the state contracted for a 2nd straight month as new orders and shipments fell sharply. Its Empire State manufacturing index rose 2 points but remained at -2. Any reading below Zero indicates contraction.
The USD rose nearly 20% beginning in late Y 2014 through Y 2015 cutting into US exports by making them more expensive, while lowering the price of competing imports.
America’s businesses have cut back their spending this year on machinery, computers and other larger equipment, even as the Fed has kept interest rates low in hopes of spurring more investment. That has lowered demand for manufactured goods.
The business spending slump has been led by energy firms, which slashed investment in new steel pipes and machinery after Crude Oil prices began to dive in June of Y 2014.
The Institute for Supply Management’s (ISM) manufacturing index fell sharply last month to 49.4. Any reading below 50 indicates contraction.
A separate report earlier this month from the US Commerce Department showed that factories received more orders in July, a sign that production could pick up in the coming months, but the government has a way of proffering misleading data.
And the Federal Reserve Bank of Philadelphia’s manufacturing gauge rose strongly for the 2nd straight month, pointing to greater output in the mid-Atlantic region.
Thursday, the US major stock market indexes finished at: DJIA +177.71 at 18212.17, NAS Comp +75.92 at 5249.69, S&P 500 +21.49 at 2147.26
Volume: Trade was moderate with about 817-M/shares exchanged on the NYSE:
- Russell 2000: +7.9% YTD
- S&P 500: +5.1% YTD
- NAS Comp: +4.8% YTD
- Dow Jones: +4.5% YTD
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
|Neutral (-0.05)||Neutral (-0.06)||Bearish (-0.40)||Bullish (0.29)|
|HeffX-LTN Analysis for SPY:||Overall||Short||Intermediate||Long|
|Neutral (0.02)||Neutral (-0.08)||Neutral (0.00)||Neutral (0.14)|
|HeffX-LTN Analysis for QQQ:||Overall||Short||Intermediate||Long|
|Neutral (0.23)||Neutral (0.13)||Bullish (0.31)||Bullish (0.25)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Neutral (-0.21)||Neutral (0.22)||Neutral (-0.18)||Very Bearish (-0.67)|
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