American manufacturing is in recession.
This week, new regional surveys from the New York and Philadelphia Federal Reserve banks showed that the sector is in contraction. Production at factories also fell for a second straight month, according to Federal Reserve data released Friday.
Global demand has slowed, low oil prices are hammering the mining sector and related industries, and the strong dollar has made things harder for manufacturers sending goods abroad.
But behind the scenes of recent headlines regarding a production slowdown was a gradual pile up of inventories. Typically, when this happens it’s a sign manufacturers are expecting future demand and sales to be strong. Alternatively, it can be a sign that manufacturers have misappraised the current global economic situation.
