Consumer Spending Remained Flat in December and U.S. Manufacturing Activity Slows Down
A strong dollar and dropping oil prices resulted in slowing manufacturing activity in the US as it contracted for the fourth consecutive month in January. Energy firms trying to cope with low oil prices have opted for huge spending cuts but now the pace of decline seems to be slowing down.
On Monday, a data showed that consumer spending remained flat in December. There was a leap in savings, which reflected three-year high and brings back hope that in the coming month's consumer spending will once again bounce back.
Thomas Costerg, an economist at Standard Chartered Bank in New York said, "The bad news is manufacturing is still contracting, but the good news is there are some signs of stabilization. There are still some dark clouds hovering over the first quarter and we hope consumers will return as savings are high."
According to the Institute for Supply Management, its index of national factory activity boosted 0.2 percentage point reaching a level of 48.2 in January. Any reading above 50 indicates expansion and below it hints at a contraction in factory activity.
The strong dollar coupled with the slowing global demand to weaken U.S. exports. The businesses in the U.S are also making an effort to trim down the huge stockpile of unsold merchandise at the warehouses.
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