WASHINGTON — Manufacturing is weakening around the globe, a trend that is weighing on U.S. growth just as the presidential campaign enters its final stretch.
In Oklahoma, manufacturing activity has slowed a little but remains in good shape, said Chad Wilkerson, Federal Reserve economist in Oklahoma City.
Nationally, factory activity shrank for a third straight month in August, according to a survey by the Institute for Supply Management released Tuesday.
Manufacturing has slumped as American businesses have scaled back demand for machinery, equipment and other investments. It's also contracting in just about every major economy overseas, including the 17 countries that use the euro, plus Britain, China, Japan and Brazil. In China, factory activity fell last month to its lowest level in more than three years.
Wilkerson said Oklahoma's manufacturing sector doesn't export much to Europe and has been insulated from the slowdown there. It's also been boosted by demand for oil and gas equipment in a still-booming energy sector, he said.
“Our manufacturing employment is up from a year ago and has outperformed the nation and other states,” he said.
The latest manufacturing survey for Oklahoma and other states in the Kansas City Federal Reserve region also had factory owners optimistic about capital investment and hiring expectations by early 2013.
However, less factory production in the U.S. and abroad has sapped a critical source of growth and jobs in the three years since the recession ended. That trend likely will keep growth and hiring tepid through the November elections.
Weakness in manufacturing may also help persuade the Federal Reserve to announce some new action after its meeting next week.
“The manufacturing recovery is at least temporarily out of steam,” said Nigel Gault, chief U.S. economist at IHS Global Insight.
An index of manufacturing activity fell slightly to 49.6 last month, down from 49.8 in July. It's the lowest level in three years, and the first time the index has stayed below 50 for three straight months since July 2009.
A reading below 50 indicates contraction, while a drop to about 43 indicates the overall economy is in recession, according to the institute.
Paul Dales, senior U.S. economist at Capital Economics, said the latest institute survey suggests the economy is growing at an annual rate between 1.5 percent and 2 percent in the July-September quarter. Growth at or below 2 percent isn't enough to significantly lower the unemployment rate, which was 8.3 percent in July.
The U.S. government will issue the August employment report on Friday.
CONTRIBUTING: Paul Monies, Business Writer