Mixed Manufacturing Data Show Economy Still Unstable

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U.S. manufacturing activity fell to its lowest level in three years in June, a possible indicator that the economy is weakening and may be falling into another recession.

The latest numbers show the manufacturing index suffered its biggest drop in more than a decade. Experts say the rates, which equate to an annual growth of only about 1.5 percent, have now reached a point that signals the economy is shrinking.

"The demand for manufactured goods is recovering moderately and irregularly, but that recovery has been relatively weak relative to the magnitude of the previous declines," Steven Wood, chief economist at Insight Economics, said.

Companies did however place more orders with U.S. factories in May, demanding more computers, machinery, and other equipment that signal investment plans.

Meanwhile, the International Monetary Fund warned Tuesday the U.S. economy could slip into recession if Congress doesn't act to stop tax increases and spending hikes early next year.

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