American manufacturing production failed to bounce back last month after slumping earlier in the year, showing the global slowdown is squeezing a key sector in the U.S. economy. The manufacturing sector has sent mixed signals in recent weeks, but Federal Reserve data released Tuesday reinforces the view that manufacturing has hit a soft patch. Production PullbackManufacturing output rose after bottomingout in 2016 but has retreated since DecemberManufacturing production index, seasonallyadjustedSource: Federal ReserveNote: 100 represents 2012 levels of production
Declines among wood products as well as motor vehicles and parts, both of which fell by more than 2% on the month, dragged down manufacturing output. Production of textiles, coal products and chemicals all rose, helping offset losses in other categories. While the U.S. manufacturing sector is clearly pulling back from a robust 2018, it remains to be seen how sharp and persistent the slowdown might be.
Manufacturers are still generally upbeat in their outlook, but the weakness in output underscores challenges posed by the global slowdown, said Chad Moutray, chief economist for the National Association of Manufacturers. “The U.S. economy continues to plug along,” Mr. Moutray said. “The real risk to the outlook comes from abroad, when it comes to the slowing global economy both in Asia and in Europe.”
Figures from a series of purchasing managers’ indexes—which measure manufacturing conditions based on surveys of companies—indicate a broader economic slowdown in recent months, as trade tensions drag on businesses across global markets.