Manufacturing in the U.S. unexpectedly shrank in June for the first time since the economy emerged from the recession three years ago, indicating a mainstay of the expansion may be faltering.
The Institute for Supply Managementâ€™s index fell to 49.7, worse than the most-pessimistic forecast in a Bloomberg News survey, from 53.5 in May, the Tempe, Arizona-based groupâ€™s report showed today. Figures less than 50 signal contraction. Measures of orders, production and export demand dropped to three-year lows.
Treasury yields fell on concern Europeâ€™s debt crisis and a slowdown in Asia are taking a bigger toll on the worldâ€™s largest economy and hurting manufacturers like DuPont Co. (DD) and Steelcase Inc. (SCS) Assembly lines are at risk of slowing further as consumers temper purchases and companies cut back on investment.
â€śManufacturing is gearing down,â€ť said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York, whose 50.5 forecast was the lowest in the Bloomberg survey. â€śItâ€™s consistent with the idea that the uncertainty is weighing on businesses. Europe is taking a bite out of the export sector.â€ť