CHICAGO (Reuters) - Business activity in the U.S. Midwest contracted this month for the first time since September 2009, as new orders sank, a report showed on Friday.
U.S. stocks .SPX added to losses after the report, which underscored worries that pressures from Europe’s recession and the slowdown in China’s growth are undercutting the already weak U.S. recovery.
It was just such a concern, along with a persistently high unemployment rate, that helped prompt the Federal Reserve this month to launch a new round of bond-buying.
“Clearly, some areas of the economy are weakening and justifies the Federal Reserve’s decision to undertake a third round of quantitative easing,” said Vassili Serebriakov, a senior currency strategist at Wells Fargo in New York. “We therefore see continued open-ended bond purchases from the Fed.”
The Institute for Supply Management-Chicago business barometer fell to 49.7 from 53.0 in August. Economists had forecast an unchanged reading of 53.
A reading below 50 indicates contraction in the regional economy.
The forward-looking new orders index plummeted to 47.4, from 54.8. while the gauge of employment sank to 52.0 from 57.1 last month.
Reporting by Ann Saphir; Editing by James Dalgleish