(MENAFN- Arab Times) US factory activity hit a more than two-year low in August as manufacturers struggled with a strong dollar, weak global demand and the lingering effects of deep spending cuts in the energy sector.
Other data on Tuesday, however, suggested the economy appeared to be on solid footing, with construction spending rising in July to its highest level since 2008.
The Institute for Supply Management (ISM) said its national factory activity index fell to 51.1 last month, the lowest reading since May 2013, from 52.7 in July. A reading above 50 indicates expansion in the manufacturing sector.
The decline in the index also likely reflected the recent global equities sell-off, which was triggered by concerns over China's slowing economy. The ISM's new orders subindex fell to 51.7, also the lowest level since May 2013, from 56.5 in July.
The employment index slipped to 51.2 last month from a reading of 52.7 in July.
Manufacturing, which accounts for 12 percent of the US economy, has been under pressure from the strength of the dollar, which has gained 16.8 percent against the currencies of the United States' main trading partners since June 2014.
A more than 60 percent plunge in crude oil prices since June last year has led to deep spending cuts in the energy sector.
The US dollar fell against a basket of currencies after the data, while US stocks were trading sharply lower. Prices for shorter-maturity US government debt rose.
But apart from manufacturing, the economy is thriving. In a separate report, the Commerce Department said construction spending increased 0.7 percent to $1.08 trillion, the highest level since May 2008, after a similar gain in June.
Construction spending has increased for eight straight months and was as up 13.7 percent compared to July of last year.
The construction spending report rounded off a month of solid data that suggested the economy had retained much of its strength from the second quarter, when it expanded at a 3.7 percent annual pace. July data for consumer spending, industrial production, business spending, housing and employment painted a fairly upbeat picture of the economy.
Construction spending in July was buoyed by a 1.3 percent jump in private construction spending to the highest level since April 2008. Spending on private non-residential construction projects surged 1.5 percent to the highest level since October 2008.
Spending on private residential construction increased 1.1 percent in July to a near 7-1/2-year high, reflecting gains in home building.
Public construction outlays, however, fell 1.0 percent. Spending on state and local government projects, which is the largest portion of the public sector segment, dropped 1.1 percent. Federal government outlays rose 0.9 percent.
Meanwhile, automakers posted Tuesday strong US auto sales in August, with crossover vehicles and pickups continuing to see robust demand amid low gasoline prices and an improving jobs market.
General Motors, the largest US automaker, said it sold 270,480 vehicles last month, a gain of 6.0 percent from August 2014.
"GM's retail sales increase far outpaced the industry in August, and we have grown our retail share for five months in a row compared to last year," said Kurt McNeil, GM's US vice president of Sales Operations, in a statement.
"All of the economic fundamentals that we look at, including job growth, disposable income and fuel prices, are in good shape and that should keep sales strong," he said.
GM said it had adjusted the month's sales for the shifting Labor Day holiday, which left this year's August period with 26 selling days, compared with 27 for last year. In unadjusted numbers, GM's August sales fell 0.7 percent.
Ford Motor said it had its best August US sales in nine years. The number-two US automaker said it sold 234,237 vehicles, a 5.0 percent increase year-on year.
Sales of F-Series pickup trucks jumped 5.0 percent to 71,332 units, the best monthly result since 2006. The company is stepping up production of its new aluminum-bodied F-150 pickup, its most popular vehicle which accounts for almost half its earnings.
Italian automaker Fiat Chrysler Automobiles's US unit, FCA US, said it had its best August sales in the United States since 2002 at 201,672 vehicles, an increase of 2.0 percent from a year ago. The results were driven higher by an 18 percent jump in its Jeep brand.
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