Promising reports on inflation and retail sales this week are giving some market participants added confidence. But it isn’t all good news for the economy, as a spate of repor💜ts on manufacturing showed signs of weakness in that sector, with data pointing to slowdowns in the labor market. 

Both 澳洲幸运5官方开奖结果体彩网:industrial production and 澳洲幸运5官方开奖结果体彩网:manufacturing capacity—measurements that track factory output —fell in July and were lower than economists expected, Federal Reserve data released Thursday showed. Additionally, monthly surveys of manufacturers conducted by the New York and Philadelphia Federal Reserve🦩 banks showed softness in 🍒the sector.

“Today brought a batch of manufacturing data that was rather grim,” wrote Wells Fargo economists Shannon Seery Grein and Tim Quinlan. “Manufacturing activity continues to flash recessionary signals, but other data, 澳洲幸运5官方开奖结果体彩网:including July retail sales, ﷺsuggest some portions♕ of the economy can continue to chug along even as manufacturers face a more precarious environment.”

The manufacturing industry is often viewed as an indicator of the broader economy's health as more goods are produced when demand is high and the economy is growing. However, economists said much of the weakness in manufacturing can be attributed to the Federal Reserve's restrictive policy.

What's the Fed Got To Do With It?

The Federal Reserve has held its influential 澳洲幸运5官方开奖结果体彩网:fed funds rate at its highest level in more than two decades in an effort to discourage spending and in turn tame inflation. That's increased the cost of🌞 all kinds of borrowing, which has led to some of the main drivers of weakness in manufacturing.

For example, slagging automobile production is a key culprit in the depressed manufacturing activity. Vehicle manufacturing steeply dropped in July and is down nearly 10% over the past year. Economists blamed high interest rates on 澳洲幸运5官方开奖结果体彩网:auto loans for the decline.

“Because consumers are aware that interest rates are set to decline in the near future, they may be holding off on making the big-ticket purchases that typically involve credit,” wro𒆙te Moody Analytics analyst Matt Coꦜlyar.

The Federal Reserve is widely expected to ease interest rates at its 澳洲幸运5官方开奖结果体彩网:upcoming September meeting, which economists have long said could bring s🥃ome relief to manufacturers.