November 9, 2016
Effects of the US Manufacturing Sector Challenges
The serious challenges that the US manufacturing sector has seen in the past few months is the source of the ripple effect in the economy. That is not tied to a particular country alone, but the effects spread to other nations that trade with countries with such challenges. Here are some of the consequences of a slow manufacturing sector in the US. Export drags Inadequate production of finished goods in the industries means that there are fewer goods to export to meet certain deadlines. When that is the case, industries have to buy more time to produce adequate supplies to provide the right quantity, and this is what creates export drag. The US manufacturing sector has seen this become a reality in the past months, while on the other hand, imports are at a steady pace. Trade deficits Exports are a source of earnings to every country when they trade with other nation from the sale of raw materials, minerals, finished products, among other goods or services. Countries that are rich in various resources stand a better chance to realize more and better gains from such trading activities. Fewer exports in the US due to export drag mean that the effect on the economy is trade deficits. Sluggish international demand for goods Various aspects affect demand for products and services and when it comes to international trade, exchange rates, and global economic weaknesses are significant factors. The US manufacturing industry bears this history, since the dollar does not receive favorable exchange rates in other nations, and the weak worldwide economy, affects demand for goods negatively as well.