The world's largest economy is going through another soft patch, a slew of new data appeared to confirm yesterday. Manufacturing, construction and private sector jobs figures all showed weakness, adding to the gloom that recovery by the US economy is stalling as it did last summer.
Analysts and traders have been looking to economic growth to help bring down stubbornly high US unemployment and to boost tax receipts that might consequently bring down federal government deficits, but optimists could point to a handful of one-off factors that explained only part of the sluggish data yesterday.
The Institute of Supply Management index of manufacturing activity for May came in at 53.5, down sharply from the 60.4 reading of April and well below the 57.0 per cent figure expected by Wall Street. A reading above 50 indicates that the US manufacturing sector is growing.
An employment report from the payroll services firm ADP showed the private sector added a meagre 38,000 jobs last month. Forecasters had predicted more than four times as many new jobs. The ADP report is seen as a harbinger of the official government unemployment figures, whose politically charged publication is scheduled for tomorrow morning.
Also out yesterday, construction industry spending rose in May, but was only because the April figure was revised sharply downward.
Paul Ashworth, the chief US economist at Capital Economics, said manufacturing may be have been affected by parts shortages after the Japanese tsunami. "Surging commodity prices could be another factor behind the deterioration in manufacturing, but... overall, it looks like this recovery has hit its second 'soft patch' which, for a recovery that is less than two years old, is troubling."