Industrial Output Grows in April
The nation’s manufacturing sector registered further growth in April, though at a slightly slower pace than the month before, while the increase in prices for raw materials also moderated.
Yet the figures Monday from the National Assn. of Purchasing Management--along with a separate government report of a surprising rise in construction spending in March--paint a picture of such a strong economy that Federal Reserve policymakers may feel compelled to raise interest rates more aggressively when they meet on May 16, economists said.
Several analysts predicted that the Fed could boost short-term rates one-half percentage point at the meeting May 16. All five of the previous rate increases since last June have been a quarter-point.
The rate increases have been aimed at reining in the economy and heading off a resurgence of inflation.
The purchasing managers’ group said its manufacturing index, based on a national survey of executives who buy raw materials for industries, registered 54.9 in April, weaker than the 55.8 reported for March and the lowest since a 54.4 reading last August. April’s number was below the 55.5 that Wall Street analysts had expected.
Still, any reading above 50 indicates growth, and the purchasing managers’ index has been above that level for 15 consecutive months.
The index is watched closely because it is the first national reading for April on the performance of manufacturing, a key sector of the economy.
Norbert J. Ore, who oversees the purchasing managers’ survey, said “the overall picture is one of continuing growth in manufacturing.” But he noted that the “trend for the last six months indicates deceleration in the rate of growth.”
The price index remained high at 76% in April but was down from the 79.8% spike the month before.
In Washington, the Commerce Department reported Monday that construction spending rose a surprisingly strong 1.4% in March to a seasonally adjusted annual rate of $765.2 billion. It was the third straight monthly increase.
