New survey reveals US manufacturing activity weakens
04 Dec 2006
According to a new survey by the Institute for Supply Management (ISM) US manufacturing has weakened sharply pointing to mounting evidence of the world's largest economy slowing down.
The ISM survey has pointed out to the national decline in factory productivity in November 2006 to its lowest level in more than three years since April 2003. That was around the time that the first strains in manufacturing were detected in the in the Midwest.
Meanwhile, the value of the dollar against other currencies has been declining steadily, with fears of a slowdown pushing it to a 14-month low against sterling. The dollar is expected to continue to decline against European currencies if the economic indicators continue to point downwards.
While interest rates have been rising across Europe, analysts feel that the recent economic indicators now point out to the possibility of the FED now reversing its policy to now usher in an interest rate cut to usher in a period of an easier monetary policy.
Though
it has issued frequent warnings about persistent inflationary
pressures, the Fed has kept interest rates intact for
three
months. Though the ISM's figures are significant, Fed
chief Ben Bernanke may move in to introduce a cut only
in the event of further evidence of a downturn.
