Business

Factory gauge falls to two-year low

Index is at the weakest level since 2016

An American flag hangs above a worker operating a forklift at a manufacturing facility in Virginia Beach, Va. CREDIT: Bloomberg photo by Luke Sharrett.
An American flag hangs above a worker operating a forklift at a manufacturing facility in Virginia Beach, Va. CREDIT: Bloomberg photo by Luke Sharrett.

A measure of U.S. factories fell in April to the weakest level since late 2016, signaling that manufacturing headwinds extended into the second quarter as companies continue to confront uncertainty about trade.

The Institute for Supply Management index slumped to 52.8, from 55.3 the previous month, missing all estimates in Bloomberg’s survey while holding above the 50 level that signals expansion.

Three of five components declined, including new orders, employment and production, according to the report Wednesday.

Thirteen of 18 industries saw growth.

The data add to reasons for Federal Reserve policy makers to leave monetary policy unchanged at the conclusion of their meeting Wednesday in Washington, D.C. (See story on page 6B.)

Treasury yields fell after the report to trade near a three-week low.

A separate report Wednesday from the Census Bureau showed construction spending fell in March for the first time in four months.

“We have moved from an unsustainable high level in manufacturing last year,” said Russell Price, chief economist at Ameriprise Financial. “This year, the pace of growth will be slower, but still solidly positive.”

The unexpected decline adds to signs that uncertainty about global trade and growth is dimming the outlook for producers across the world’s largest economy, even as other measures of economic health have been looking more upbeat.

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The gauge for export orders fell below 50 for the first time in three years while imports missed the threshold for the first time in two years — the latest evidence the Trump administration’s trade wars are weighing on factories.

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