Last week, the Institute for Supply Management reported that U.S. manufacturing activity grew at its slowest pace since May 2020. Manufacturing is still expanding (the index stands at 50.9 with anything over 50 indicating expansion); however, the employment part of the index fell from 54.2 to 48.7 indicating contraction.
Locally, manufacturing employment has fallen slightly from a recent high of 24,100 in June to 23,850 in August. Nationally, manufacturing makes up 11.9 percent of the U.S. economy and 11.6 percent (2020) in the Augusta Metropolitan Statistical Area. Manufacturing accounts for 9.7 out of every 100 jobs in the local area.
There are two reasons for the slowdown in manufacturing. First, consumers continue to shift their expenditures away from goods and back to services. Second, higher interest rates on consumer loans are impacting purchases of large ticket items such as furniture, household appliances, and cars.
The other large purchase made with loans, housing, has also started to level off.
The S&P/Case-Shiller U.S. National Home Price Index fell slightly in July from June. The average list price in Augusta fell from $376,014 in June to $367,647 in September. The average 30-year fixed rate mortgage is now 6.7 percent, up from 3 percent a year ago.
The Federal Reserve’s aim of dampening demand is beginning to be seen in the Augusta area.
