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September, 2012 Blog: Current slowdown caused by Europe or election?

Worrisome new statistics show that American Manufacturing has declined slightly for the third straight month as new orders, production and employment fell in August. Weak consumer spending and declines in business orders for large machinery and other capital goods are slowing factory output. Export orders increased but new orders, a sign of future production, dropped.

The report adds to other signs that manufacturing is struggling around the globe as Europe and rest of the global economy remains sluggish. The big exception is the U.S. auto industry. GM, Ford and Chrysler all reported double digit increases in business thanks to Americans buying American made cars and trucks.

Meanwhile, US productivity grew at 2.2 percent rate in April-June quarter, faster than previously thought. Higher productivity is normal during and after a recession. Companies tend to layoff workers and increase output from the remaining employees. The unemployment rate creeped up to 8.3 percent. Economists believe that hiring probably won't accelerate from that level unless growth picks up or productivity slows.

Large sums of investment capital seem to be sitting on the sidelines waiting until after the U.S. presidential election. It is likely that no matter who wins the election, the money will likely start flowing once the election is over because there will no longer be political motivations for CEOs to hold back on company expansion plans.

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