FRIDAY, March 29, 2024
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Dow Jones Index drops on concerns of US-China trade war

Dow Jones Index drops on concerns of US-China trade war

The Dow Jones Index closed at 26,118.02 on Tuesday. a drop of 285.25 points from Friday when the US industry index on August fell for the first time in three years as investors showed their concern about the latest round of tariffs on imports from China that came into effect on September 1. 


According to the latest reports, economic activity in the manufacturing sector contracted in August, though the overall economy grew for the 124th consecutive month, executives noted in the latest Manufacturing ISM Report On Business.
The report was issued on Tuesday (September 2) by Timothy R Fiore, CPSM, CPM, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee and noted that the August PMI registered 49.1 per cent, a decrease of 2.1 percentage points from the July reading of 51.2 per cent. There are falls were across the board, with the New Orders Index registering 47.2 per cent, down 3.6 percentage points from the July reading of 50.8 per cent. The Production Index registered 49.5 per cent (a 1.3-percentage point decrease over July), the Employment Index registered 47.4 per cent (4.3 percentage points down) and the Supplier Deliveries Index registered 51.4 per cent (1.9-percentage point down). The Inventories Index registered 49.9 per cent, an increase of 0.4 percentage point from the July reading of 49.5 per cent while the Prices Index registered 46 per cent, a 0.9-percentage point increase from the July reading of 45.1 per cent.
“Comments from the panel reflect a notable decrease in business confidence. August saw the end of the PMI expansion that spanned 35 months, with steady expansion softening over the last four months. Demand contracted, with the New Orders Index contracting, the Customers' Inventories Index recovering slightly from prior months and the Backlog of Orders Index contracting for the fourth straight month. The New Export Orders Index contracted strongly and experienced the biggest loss among the sub-indexes. Consumption (measured by the Production and Employment Indexes) contracted at higher levels, contributing the strongest negative numbers (a combined 5.6-percentage point decrease) to the PMI, driven by a lack of demand. Inputs, expressed as supplier deliveries, inventories and imports, were again lower in August, due to inventory tightening for the third straight month and continued slower supplier deliveries. This resulted in a combined 1.5-percentage point decline in the Supplier Deliveries and Inventories indexes. Imports and new export orders contracted to new lows. Overall, inputs indicate (1) supply chains are responding better and (2) companies are continuing to closely match inventories to new orders, a positive sign for future expansion. Prices contracted for the third consecutive month, indicating lower overall systemic demand.
“Respondents expressed slightly more concern about US-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders. Respondents continued to note supply chain adjustments as a result of moving manufacturing from China. Overall, sentiment this month declined and reached its lowest level in 2019,” Fiore noted.
Of the 18 manufacturing industries, nine reported growth in August, in the following order: Textile Mills; Furniture & Related Products; Food, Beverage & Tobacco Products; Wood Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Machinery; Miscellaneous Manufacturing; and Chemical Products. The seven industries reporting contraction in August in the following order are: Apparel, Leather & Allied Products; Fabricated Metal Products; Transportation Equipment; Primary Metals; Plastics & Rubber Products; Paper Products; and Electrical Equipment, Appliances & Components.

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