U.S. manufacturing growth slows as orders weaken

Two reports found signs of a slowing economy as U.S. factories expanded at a weaker pace in March and construction spending fell in February.

But the slowdown in both sectors is expected to be short-lived.

The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its manufacturing index slipped to 51.5 in March from 52.9 in February.

It was the fifth straight drop. Still, any reading above 50 signals expansion.


U.S. manufacturers have faced a drag in recent months from falling oil prices, a rising dollar, winter storms and a since-resolved shutdown of West Coast ports that has created a backlog of shipments.

Some drilling rigs have stopped as oil prices have fallen more than 50% since June to below $50 a barrel, curbing demand for pipelines and machinery from factories. Simultaneously, the dollar has risen in value against the euro and other currencies, making American-made goods more expensive abroad and cutting into exports.

Still, there is the expectation that manufacturing will rebound as the effects of the winter weather and port shutdowns fade.

“We’re well positioned for the distinct possibility of an uptick, an upswing, in momentum as we go forward,” said Bradley Holcomb, chairman of the ISM’s manufacturing business survey committee.


Other reports back up evidence of a slowdown.

Orders for long-lasting goods dropped in February, the third decline in four months, the Commerce Department reported last week.

Falling demand for commercial aircraft, autos and machinery caused durable goods orders to drop 1.4% in February.

Factory output also tumbled in February, the Federal Reserve reported this month. The 0.2% decline was led by drops in the production of autos, machinery, appliances and primary metals such as steel.


Another report Wednesday found construction spending slipped for the second month in February, pulled down by a drop in single-family home building.

Construction spending fell 0.1% in February after a revised 1.7% drop in January, the Commerce Department reported.

The result in part reflects bitter winter weather that constrained construction in many parts of the country during the month. Economists are hopeful for a rebound in the spring and summer as the economy strengthens.

Last month, the government said that the pace of housing starts plummeted 17% in February from January’s rate. Home construction slid 56.5% in the Northeast and 37% in the Midwest, the two regions that endured the brunt of the winter storms.


In Wednesday’s report, private spending on construction of single-family homes declined 1.4%, while spending on apartments was up 4.1%. Nonresidential construction spending rose 0.5%, led by a 5.5% jump in hotel construction and a 6.8% surge in factory construction.

Total private construction spending, which rose 0.2%, was offset by a 0.8% retreat in public construction spending.