U.S. Factory Activity Contracts in January

The Institute for Supply Management said Monday its gauge of manufacturing activity rose to 48.2 last month from 48 in December. A reading below 50 indicates the sector is contracting. As manufacturing decreased steadily in 2015 any growth showing is a move in the right direction, albeit slowly. The strong US dollar and low cost of oil causes exports to slow, though manufacturing is only 12% of US economic output and 9% of overall US payrolls. Coupled with higher than average inventories with manufacturers and the contraction of the Chinese economy, any modest contraction is a concern.

Industrial worker in manufacturing plant grinding to finish a pipeline

As the import and export markets acclimate to the strong US dollar and falling oil prices, we’re all fearful of the job market beginning its own contraction soon. As the US economy finished 2015 in a record job creation sprint, the January information, available today shows a continued, though smaller gain. Unemployment is at an eight year low which demands an increase in wages, as shown by the 2.5% wage increase over the previous 12 months.

“The report continues to signal modest contraction in manufacturing, although the economy as a whole is stronger than implied by these data alone,” said Jim O’Sullivan, chief U.S. economist for High Frequency Economics. “Overall growth has been led by the much larger non-manufacturing sector.”

Continuing on the same path (current recovery began in mid-2009) the most-educated job seekers are excelling in the employment market: The unemployment rate for those with college degrees is steady d in January at 2.5 percent, while unemployment climbed to 7.4 percent for people who do not graduate high school


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