US manufacturing activity sees first quarterly decline since 2017

  • Industrial output unexpectedly fell in March, the Federal Reserve said Tuesday.
  • The data was the latest pointing to slowing activity in the manufacturing sector, which economists say could enter a mild recession this year.
  • Economists say the slowdown is in part due to the fading effects of stimulus measures, but trade tensions haven’t helped.

A gauge of the American industrial sector unexpectedly slipped in March, offering the latest sign of a slowdown in manufacturing activity as global growth cools and trade tensions continue.

The Federal Reserve said Tuesday that industrial production – which measures factory, mine, and utility output – fell 0.1% last month. Economists surveyed by the Wall Street Journal had expected a 0.2% increase.

Manufacturing activity was flat in March after sliding in January and February. In the first three months of 2019, factory output declined 1.1% to mark the first quarterly drop since late 2017.

That was just the latest sign of a slowdown in manufacturing activity, which accounts for about a tenth of output in the US economy. Last month, the US shed 6,000 manufacturing jobs after nearly two years of steady gains.

Some think the manufacturing sector could enter a recession this year as the American economy grows at a much slower pace in coming months, with first-quarter GDP estimates of between 1% and 2%.

Data on Tuesday also showed mining output fell 0.8% in March, while utility activity edged slightly higher.

The broader slowdown is in part thanks to the fading effects of stimulus measures, including a $US1.5 trillion tax-cut package passed in the US in 2017, but trade tensions between the US and its major trading partners haven’t helped.

Tariffs levied last year as part of the Trump administration’s crackdown on trade practices seen as unfair have raised company costs, lowered access to foreign markets, and disrupted supply chains.

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