Economic security

American manufacturing is in danger of entering a recession

Manufacturing activity in the US unexpectedly fell for a second straight month in February, underscoring expectations for slower growth across major economies and raising concerns that the sector could be headed for a downturn.

Factory output fell 0.4% last month, Federal Reserve data showed on Friday, compared with expectations for a slight increase. In January, manufacturing activity fell 0.5%.

"In other words, a broad-based softening is underway, and we're sticking to our view that the sector will be in recession through mid-year," Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said.

From machinery to electronics, manufacturing output fell across sectors in February. The decline was offset by an increase in utilities and mining, bringing overall industrial production 0.1% higher from a month earlier.

Motor-vehicle production was little changed after dropping a steep 8.8% in January.

Because the manufacturing sector accounts for just more than one-tenth of activity, Shepherdson said a short recession in the sector wouldn't bring the rest of the economy down with it. But it would be a constraint on overall growth in both gross domestic product and employment.