January 31, 2020 / 3:46 PM / 20 days ago

U.S. Midwest manufacturing activity hits 4-year low

Jan 31 (Reuters - A gauge of U.S. Midwest manufacturing activity slid to a four-year low in January, with new orders and production tumbling and producers forecasting tepid activity in 2020 despite the Trump administration’s recent trade deals, a regional purchasing managers’ survey showed on Friday.

The Chicago Business Barometer fell to 42.9, the lowest level since December 2015, from 48.2 in December. Economists polled by Reuters had expected a third straight month of improvement to 48.8.

A reading below 50 indicates contraction in the sector, and January’s reading marked the seventh straight month below that benchmark level as goods producers struggled with low demand as a result of Donald Trump’s trade war with China.

The administration recently signed a Phase 1 pact with China that lowered some tariffs, and Congress ratified a separate agreement with Canada and Mexico, the largest U.S. trading partners, deals that businesses and economists had hoped would lift some of the gloom on the sector.

But answers to two special questions in January’s survey suggest little improvement ahead.

Asked if signing of the U.S. Mexico Canada Agreement would improve supplier lines, 60% of respondents saw no improvement at all and the other 40% saw little change, the report said.

Regarding their business activity outlook for 2020, 50% expected growth below 5% this year. Fewer than 7% anticipate double-digit growth in 2020, the report said. (Reporting by Dan Burns Editing by Chizu Nomiyama)

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