US Manufacturing Sector Maintains Steady Growth On ISM Index

The manufacturing sector in the US economy has continued to show strength over August, according to official figures released today.

The figures released by the Institute for Supply Management reveals a slight fall in their manufacturing index from 53.9 to 52.9, with analysts widely predicting a round 53.0 to be the outcome of the day. While the figure remains over 50, the manufacturing sector is growing, whereas number below 50 indicate contraction, suggesting that the US manufacturing sector is growing in line with the wider economy.

Whilst the news does reflect a slowdown, it also suggests that US manufacturing has remained relatively strong at a time when the rest of the economy is suffering the brunt of the sub-prime calamity.

With foreclosures and repossessions expanding too quickly for banks to react, mortgage lenders are being left short of liquidity. As such, inter bank borrowing is at an all time high in terms of cost, with credit becoming more of a premium worldwide.

As a result, many businesses throughout the US will find it increasingly hard to finance growth and expansion, which could have a knock-on effect on employment and the direction of the economy as a whole. With mortgage lenders on the verge of insolvency, it is thought the economy as a whole could be in for recession, in the worst case scenario, with adverse growth and performance almost a certainty.

However, with today’s news comes the reflection that the US is not yet down and out, suggesting that the sub-prime is either unlikely to have any impact at all, or more realistically, that impact has not yet been felt across the broader economy.

The news was well received on the Dow Jones and NASDAQ exchanges today, which both traded strongly after the news was announced.

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