The U.S. economic slowdown triggered by Trump's trade war has become sharp and disturbing, especially for the hard-hit manufacturing sector.
The U.S. Federal Reserve said manufacturing output fell unexpectedly for a second straight month in February, extending an unnerving streak of weak output confirming the sharp slowdown in U.S. economic growth in the first quarter. Manufacturing accounts for 12 percent of the economy.
In addition, the Fed said factory activity in New York State hit a two-year low this month.
The Fed said manufacturing production dropped 0.4 percent in February as a result of declines in motor vehicle output, machinery, and furniture. Motor vehicles and parts output slipped 0.1 percent in February after plunging 7.6 percent in January. Excluding motor vehicles and parts, manufacturing output fell 0.4 percent in February, the largest decrease in nearly a year.
Data for January became bleaker after being revised to show output at factories falling 0.5 percent instead of dropping 0.9 percent as previously reported. The Fed said this was the first back-to-back drop since mid-2017.
February's drop in manufacturing production was one in a range of reports showing disappointing results. Data showing weak retail sales and housing, among others, suggests the economy lost significant momentum early in the first quarter.
The Federal Reserve Bank of Atlanta now forecasts gross domestic product will rise at a 0.4 percent annualized rate in the first quarter. GDP grew at a 2.6 percent pace in the fourth quarter of 20-1.
On the other hand, economists polled by Reuters forecast an improvement of manufacturing output to 0.3 percent in February.
Economists say the economy is losing steam with the evaporation of the stimulus from last year's $1.5 trillion tax cut package. Growth is also being hamstrung by Trump's trade war with China. Compounding America's weak economic growth is the stubbornly strong dollar, debilitated global economic growth that limits U.S. exports, and the 35-day partial shutdown of the U.S. government that ended Jan. 25.
For its part, the Federal Reserve Bank of New York said its general business conditions index fell 5.1 points to in 3.7 in February, the lowest since May 2017. It was the third straight monthly reading below 10. The New York Fed said this fall suggested: "growth has remained quite a bit slower so far this year than it was for most of 2018."
The new orders indicator fell 4.5 points to 3.0 in March. The weakness reported by the New York Fed also suggests that national factory activity remains sluggish in March after slowing sharply in February.
More grim news. The Institute for Supply Management (ISM) said its measure of national manufacturing activity fell to more than a two-year low in February, accompanied by a steep decline in the new orders component.
