The total number of shipping containers hauled on U.S.
railroads so far in 2023 is 7% below year-ago levels, according
to weekly carload reports published by the Association of
American Railroads.
The manufacturing slowdown has already caused consumption of
diesel and other distillate fuel oils to stagnate; the volume of
distillates supplied was down in five of the eight most recent
months compared with prior-year levels.
The manufacturing outlook is probably negative. Real wages
and salaries are still falling, while real interest rates are
rising, both of which imply the manufacturing slowdown is likely
to intensify over the next few months.
As the U.S. central bank continues to increase interest
rates to wring persistent inflation out of the service sector,
the less labour-intensive but more energy-intensive
manufacturing sector is likely to suffer collateral damage.
Related columns:
- Labour hoarding exaggerates strength of U.S. job market
(Reuters, February 6, 2023)
- U.S. manufacturing is in recession (Reuters, February 1,
2023)
- Recession now or later? Unenviable alternatives for 2023
(Reuters, January 26, 2023)
- U.S. manufacturing has probably entered recession
(Reuters, January 19, 2023)
John Kemp is a Reuters market analyst. The views expressed
are his own
(Editing by Mark Potter)
By John Kemp
LONDON, Feb 15 (Reuters) - U.S. manufacturing activity
is falling as businesses and households pull back spending in
the face of rapidly rising prices and heightened uncertainty
about the outlook for 2023.
Manufacturing output for the three months from November 2022
through January 2023 was almost 1.8% lower than in the three
months between March and May 2022.
Production at the end of 2022 and the start of 2023 was no
higher than twelve months earlier, according to estimates
prepared by the U.S. Federal Reserve.
The downturn in recent months is comparable with the onset
of previous recessions in 2008 and 2000, and mid-cycle slowdowns
in 2018 and 2014.
Chartbook: U.S. manufacturing production
The weakness of manufacturing production is consistent with
business surveys which have showed activity falling every month
since November.
It is also consistent with data on new orders for
non-defense capital equipment excluding aircraft, a proxy for
business investment spending.
New orders were up by just 5.6% in nominal terms in the
three months from October to December compared with the same
period in 2021.
Since inflation was running faster than this, however, the
volume of new orders had likely fallen in real terms by several
percentage points.
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