Localization in Saudi military industries rises to 19.35%    Logistics park for vehicles worth SR300 million to be set up at Dammam port    Commerce Ministry recalls 6,500 Genesis cars due to risk of fire    HONOR KSA expands its presence with new flagship Experience Store in Riyadh HONOR's first flagship store in KSA provides visitors with a premium experience, exciting offers and free services    Saudi, Iranian foreign ministers discuss Oman-mediated talks with US    Prince Sultan University launches first bachelor's program in language and media    Al-Falih: Eastern Province hosts 700 investment opportunities worth SR330 billion    India demolishes houses of 10 alleged militants days after deadly Kashmir attack    Yemen's Houthis claim dozens killed in US strike on prison holding African migrants    Putin announces three-day Russian ceasefire in Ukraine from 8 May    Crown Prince donates SR1 billion to support housing for eligible families    Suspect charged after Vancouver car ramming leaves 11 dead    Rock & Roll Hall of Fame picks Outkast but not Oasis    Makkah police arrest Yemeni and Egyptian suspects of fake Hajj campaign    Duran leads Al Nassr past Yokohama Marinos into AFC Champions League Elite semi-finals    Al Ahli cruise past Buriram into AFC Champions League Elite semi-finals    Saudi orchestra to perform at Sydney Opera House in May    Al Hilal thrash Gwangju to reach AFC Champions League Elite semi-finals    Saudi Theater Commission launches its Work and Learn Project in UK    The season has begun — and one comment shook us all    Pakistani star's Bollywood return excites fans and riles far right    Veteran Bollywood actor Manoj Kumar dies at 87    Bollywood actress vindicated over boyfriend's death after media hounding    Grand Mufti rules against posting prayers and preaching in mosques on social media    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



US industry sector reels from turmoil
Published in The Saudi Gazette on 17 - 10 - 2008

More troubling US economic data surfaced Thursday showing the banking and credit crisis has taken a sharp bite out of the manufacturing sector.
The Federal Reserve reported US industrial production plunged 2.8 percent in September, the steepest decline since 1974.
A large portion of the decline came from industries affected by hurricanes Gustav and Ike in the US Gulf coast and a strike at aircraft maker Boeing, but analysts said the figures were nonetheless grim for an economy already reeling from a housing meltdown and credit crunch.
“Today's industrial production report was one of the worst ever,” said Aaron Smith at Economy.com.
Smith said that despite the special factor such as hurricanes curbing energy production, “these technical considerations merely added to widespread weakness in manufacturing that is consistent with recession-like behavior.”
A separate report by the Philadelphia Federal Reserve on factory activity in the mid-Atlantic eastern region also showed extremely weak conditions. The index plunged 41 points - its biggest drop ever - to minus 37.5, the worst level since 1990.
John Ryding at RDQ Economics said the horrific conditions in the manufacturing sector reflect the problems with credit, weak consumer spending and troubles in the global economy, which is no longer able to buy as many US-made goods.
The latest reports “provide some degree of support to our skepticism of the Fed's claim that all of the decline in industrial activity in September was a result of the Boeing strike and the hurricanes,” Ryding said.
“In our opinion, economic activity deteriorated sharply later in the third quarter and into the fourth quarter, probably reflecting tightening credit conditions and a significant slowing in global markets.”
The factory reports came a day after an unusually bleak report on US retail sales, which represent the bulk of US economic activity, which heightened anxiety about a consumer-led recession in the United States.
Most economists say the extraordinary efforts by Washington and other governments to stem the credit crisis appear to be helping confidence but will not prevent recession in the world's biggest economy.
“Recession is on its way,” said Carl Weinberg, chief economist at High Frequency Economics.
“The seeds of recession germinated during the (credit) crisis and the likelihood is that most of the world - although not China - will be in recession long after the uncertainty about the world's banking sector has dissipated.”
The news from the banking sector was hardly reassuring.
The only mildly positive news came from data showing US consumer prices were flat in September. But analysts said this reflected the credit crisis and falling energy costs.
Many analysts say the surge in inflation earlier this year, which raised fears of stagflation, has now faded in the face of economic blows from a global credit crisis. The Federal Reserve earlier this month cut its base rate a half-point to 1.5 percent, reversing its posture leaning toward a rate hike to curb inflation earlier in the year.
Some say the Fed may have to cut rates further to jump-start a moribund economy that will push prices down further.
“The combination of rising unemployment, restrained household spending and weak industrial production are a toxic mix for inflation,” said Joseph LaVorgna, economist at Deutsche Bank.
“As these conditions worsen in the coming months - as we believe they will - price pressures will face significant downdrafts.” US consumer prices were flat in September as retreating costs for gasoline, clothes and new cars helped to offset rising prices for food, medical care and other things. The new reading on the Consumer Price Index, the government's most closely watched inflation barometer, came after prices actually dipped by 0.1 percent in August, the Labor Department reported Thursday.


Clic here to read the story from its source.