The US just got the latest sign manufacturing activity is slowing down

  • Factory orders rose less than expected in December.
  • That came after two straight months of declines.
  • Manufacturers have warned that tariffs have disrupted supply chains.

New orders for American-made goods rose less than expected at the end of 2018, underscoring expectations for weakening manufacturing activity.

The Commerce Department said factory orders edged up 0.1% in December, compared with economist expectations for a 0.5% increase. The release was delayed due to the 35-day partial government shutdown at the start of the year.

There have been growing concerns about the outlook for the manufacturing sector, with factory orders unexpectedly declining 0.6% in November. A month earlier they had declined 2.1% to mark the largest drop in more than a year.

Orders for machinery slid for a second month, down 1% in December. Excluding aircrafts, which jumped by more than a quarter, orders for core capital goods also fell 1%.

A range of factors including a strong dollar and fading stimulus have weighed on the industry. In December, lower oil prices appear to have taken a toll on activity, with oil and gas related orders declining more than 5%.

But manufacturers across the country have also warned in industry surveys that protectionism has led to higher costs and disrupted supply chains.

“The ongoing open issues with tariffs between US.. and China are causing longer-term concerns about costs and sourcing strategies for our manufacturing operations,” said a respondent to the Institute for Supply Management’s December survey.

President Donald Trump has sparked tariff disputes with several countries, including the US’s biggest trading partners. His administration has placed import taxes on more than $US300 billion worth of products so far, prompting retaliatory measures from major economies.

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