U.S. manufacturing grew at a slower-than-expected pace last month, reflecting concerns about supply chain disruptions as the coronavirus spreads.
This story originally appeared in Trade Only Today.
The Institute for Supply Management’s manufacturing index fell to 50.1 in February from 50.9 in January, according to CNBC. A reading above 50 indicates expansion; below 50 shows contraction.
Some data on Monday were more optimistic. Construction spending increased by the most in nearly two years, hitting a record high in January, according to Reuters. But that news was overshadowed by the coronavirus outbreak, which sent global financial markets tumbling last week.
The yield on the two-year treasury note fell below 1 percent for the first time since 2016.
Investors worry COVID-19 could derail the longest economic expansion on record, now in its 11th year.
Federal Reserve Chairman Jerome Powell last Friday described the U.S. economy’s fundamentals as “strong” but acknowledged that the “coronavirus poses evolving risks to economic activity,” adding that the U.S. central bank would “use our tools and act as appropriate to support the economy,” Reuters reported.
The ISM index pulled above the 50 threshold in January for the first time in five months, as trade tensions between the U.S. and China eased following the signing of a partial deal that month. But the coronavirus, which has killed at least 3,000 people and infected more than 80,000 worldwide, is a new threat for factories.
Many of those infected are in China, where the manufacturing sector contracted to its lowest level on record, according to Bloomberg.