As Growth Cools, U.S. Factories Brace for Oil Shock

America’s factories are bracing for trouble and hoping it doesn’t last.  The Institute for Supply Management’s manufacturing index declined to a one-year low of 53.5 from December’s 55.1, according to data from the Tempe, Arizona-based group Monday. Readings greater than 50 signal growth. Another report showed consumer spending fell in December after surging over the previous two months.

While gauges of orders, exports and production cooled last month, the comments from respondents were more positive, with the makers of food, autos and computers saying sales remained strong so far in 2015. That signals the 50 percent drop in oil prices in the second half of last year has created winners and losers — energy consumers versus producers — and is making manufacturers hesitate as they await the shakeout.

“With the deep downdraft in commodity prices, many firms are concerned about the ultimate demand for their products,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who projected the ISM index would drop to 53.4. “After a strong 2014, manufacturing is set to slow in the coming year, though not dramatically so.”

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.