Manufacturing growth slows
new york -- U.S. manufacturing expanded in September at its slowest pace since March as concerns about the housing bust and shaky consumers cast a shadow over otherwise healthy factories, according to a survey published Monday.
The Institute for Supply Management said its index of national factory activity fell for a third straight month in August, to 52 from 52.9, below economists’ median forecast of 52.6.
The index remained above the crucial threshold of 50, signaling continuing expansion in manufacturing.
“We just don’t get major slowdowns in the economy with purchasing managers remaining above the 50 level,” said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York.
The protracted real estate slide exacerbated by the sub-prime turmoil has stirred anxiety that the U.S. economy is vulnerable to a sharp slowdown lasting into next year. A surprise payroll decline in August, the first in four years, became a focal point of recession fears.
The institute said respondents to its survey cited concerns about the faltering housing market and the effect on consumers, although others said business remained strong.
Last month, the Fed pared the key federal funds rate for the first time in more than four years, shaving it by half a percentage point to 4.75% in a move to counter the recession risk stemming from the housing slowdown.
The institute’s index on new orders, a gauge of future growth, declined to 53.4 from 55.3 in August, and its reading on production slipped to 54.6 from 56.1.
“Overall, soft but not disastrous,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics, in a note after the report’s release. “We had expected a slightly higher reading following a raft of regional surveys released last week, so this is a modest surprise.”
There were a few bright spots in the institute report. The employment index edged up to 51.7 from 51.3, and the prices-paid index, which measures inflationary pressures within the factory sector, receded to 59 from 63.
