Claim: President Joe Biden claimed credit on Tuesday for what the White House describes as “the manufacturing boom across the country.”
“We’ve already created 800,000 good-paying manufacturing jobs, the fastest growth in 40 years,” Biden said. “Where is it written that America can’t lead the world in manufacturing again?”
The manufacturing sector contracted in January for the third consecutive month, according to the Institute for Supply Management (ISM). The activity level has fallen so low that it indicates the overall economy has been in contraction for two consecutive months, according to ISM’s Timothy R. Fiore.
The ISM index tracking new orders, a key leading indicator of the health of the sector, has been contracting for five months. The pace of the contraction is accelerating, indicating that production is likely to fall even further. Production has been shrinking for two months.
A survey of purchasing managers by S&P Global found that the manufacturing sector in December contracted at the fastest pace since the anti-pandemic lockdowns of 2020. In January, the health of the US manufacturing sector continued to decline but at a slightly slower pace than last year, S&P said recently.
“Despite rising in January, the PMI remains at one of the lowest levels recorded since the global financial crisis, indicating a worryingly steep rate of decline in the health of the goods producing sector. Production has now fallen for three successive months, signalling a sharp fall in output which is now becoming increasingly evident in the official statistics and suggesting that the manufacturing sector has become a major drag on GDP,” said S&P Global economist Chris Williamson.
A survey of regional manufacturing activity by the Federal Reserve Bank of Philadelphia found that manufacturing activity continued to weaken in January, the fifth straight month of contraction. The Federal Reserve Bank of Richmond said last month that the Fifth District Survey of Manufacturing Activity’s index dropped deep into negative territory, falling to the lowest level since May of 2020. A survey by the New York Fed showed a sudden collapse in manufacturing in January.
Manufacturing activity expanded in 2021 and 2022 as the economy emerged from the pandemic and spending was still heavily tilted toward goods. It is now in the process of shifting toward services, weakening demand for goods. What’s more, interest rates have risen as a result of the Fed’s fight against the inflation surge sparked by the Biden administrations reckless spending, making it costlier to finance big ticket items.
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