Weak U.S. manufacturing is the only bright spot in the global economy, suspected of entering a recession

Recent weakness in the U.S. manufacturing sector has added new gloom to a sluggish, turbulent 2016, fueling fears that the only bright spot in the global economy has slipped into recession. The Dallas Fed reported on Monday that its January manufacturing index fell 13 basis points from December to -34.6, far below market expectations of -14.5 and hitting its lowest point since the Great Depression in 2009. The jurisdiction covers Texas, southern New Mexico and northern Louisiana. The overall U.S. manufacturing situation is also not optimistic. Although the initial value of the Markit Manufacturing Purchasing Managers Index (PMI) released on the 22nd rebounded slightly from December, rising from 51.2 to 52.7, it was not enough to dispel the haze lingering over the manufacturing sector. The index hit a 38-month low in December. The U.S. Institute for Supply Management (ISM) released the December manufacturing PMI of 48.2, which was below the 50 line for two consecutive months and hit the lowest level since June 2009. The index has been falling since mid-2015 and slipped into contraction territory by the end of the year. Similar manufacturing indicators such as freight volumes and inventories show similar trends. Manufacturing accounts for less than 12% of U.S. GDP and provides 8.6% of employment. But the importance of manufacturing to the U.S. economy is more reflected in the ripple effects on employment-intensive services and financial markets. 'Manufacturing is more important than its size suggests,' said Bruce Kasman, chief economist at JPMorgan Chase u0026 Co. 'Moreover, manufacturing also acts as a signal, the earliest indicator of changing economic conditions.' People worry because the situation is not what it should be. The Financial Times reported that the shale gas revolution, new technological breakthroughs and central bank quantitative easing should in theory encourage companies to move or expand production within the United States, but in fact, 'all of this It didn’t happen”, falling energy costs elsewhere slashed U.S. competitive advantage, global overcapacity dampened companies’ desire to expand production, and quantitative easing was more of a push for executives to buy back stock rather than capitalize on cost savings Make new investments. In addition to weak global demand and a slump in commodities, analysts cited a strong dollar and slowing growth in China as two other major contributing factors to manufacturing weakness. As a precursor to the economic crisis, the downturn in manufacturing has sparked concerns about the entire U.S. economy, and even the global economy. 'Manufacturing usually leads the entire economic cycle and is often a signal of economic volatility,' said Thomas Costerg, a senior economist at Standard Chartered. 'The manufacturing industry is in deep trouble.' The analysis of the 'Financial Times' said that in addition to manufacturing, US employment Growth momentum has not returned to pre-financial crisis levels, and inflation momentum has been markedly weak. 'All of this means that deflationary pressures are building and the likelihood of a recession (almost all starting with manufacturing) is increasing. This makes it even more remote for the Fed to continue raising interest rates in the future.' Confidence in fundamentals and prospects raised the federal benchmark interest rate by 25 basis points. However, judging from the report released by the New York Fed's research and statistics team, the US economy may not be able to recover. Real consumer spending, housing, and employment data improved slightly, but manufacturing inflation remained below the Fed's long-term target of 2 percent, and real GDP growth was estimated at 2.0 percent in the third quarter of last year, down from 2.1 percent in the same period in 2014. The report also said a slowing Chinese economy and weaker global growth weighed heavily on financial markets and commodity prices, adding fresh worries in 2016. A CNBC survey released last week found that the likelihood of a U.S. recession is the highest since the fall of 2011. But Wells Fargo analysts commented on the U.S. manufacturing situation that, at least for now, worries about a manufacturing-led recession are 'exaggerated.' 'Factory activity (really) is having a tough time, but we're not going to declare a 'manufacturing recession' here,' the analysts said. 'Our analysis of key variables - output, employment, real income and real sales - shows , the current challenges facing the manufacturing industry are not enough to constitute a recession.' A commentary published by MarketWatch on the 24th said that whether the United States has fallen into a recession ultimately depends on the conclusion of the National Bureau of Economic Research (NBER) Business Cycle Determination Committee. The committee determines when the economy begins to decline by studying a series of indicators such as economic output, income, employment, and industrial output. From past experience, the committee usually only makes a conclusion when the turning point of the recession is very obvious. . The commentary said that from the current point of view, it may be too early for NBER to announce the beginning of a recession, but Robert Hall, a professor at Stanford University who led the committee, expressed his personal judgment: 'I am very worried about the global and world economy.'