More US companies are reporting lower sales as a result of China’s slowing economy and are revising global outlooks.
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Indiana engine maker Cummins lowered its revenue forecasts and announced layoffs by the end of the year. Portland’s Schnitzer Steel Industries, one of the country’s largest metal recyclers, is cutting its workforce by 7%. Caterpillar reported lower sales in China and cut its global forecast for 2012.
Industries like mining, heavy machinery, and scrap metal that boomed as China’s economy boomed are now being hit the hardest by its slowdown.
Much of Europe is already in recession and growth in the US is anemic. Softening demand is hurting American exports. The drop in exports to China is said to be responsible for .1% to .2% of US economic growth and has probably contributed to the loss of 38,000 US manufacturing jobs since July.
Faster growth in either the US or European economies could offset the losses being felt from the slowdown in China. China is the third largest buyer of US goods after Mexico and Canada.
Exports of steel and iron scrap to China are down 53% this year compared to a similar period in 2011.
Prices are also down about 30% as a result. Paper recycling companies are also hurting since China takes the paper, then sends it back in the form of cardboard boxes. But with local construction slowing down in China, there’s much less need for scrap of any kind.