Manufacturing Activity Slows Again, But Far Less Than Economists Expected
A WALL STREET JOURNAL ONLINE News Roundup
Manufacturing activity continued to slow in August, according to a closely watched survey, though the decline was not nearly as severe as many economists had expected.
Separately, construction spending edged lower for the second straight month in July.
The National Association of Purchasing Management said Tuesday its index of business activity rose to 47.9 from 43.6 in July, the biggest improvement in five years.
A reading below 50 signals contraction of activity, and August marked the 13th straight month of contraction. But many economists had expected the index to improve only slightly to a reading of 44, according to a survey by Thomson Global Markets.
"The rate of decline decelerated significantly during the month," said Norbert J. Ore, who oversees the monthly survey. He said production and new orders had grown after a long period of decline, indicating that a number of industries may be starting to recover.
"This is potentially the turning point for the manufacturing sector," said David Orr, chief economist for Wachovia Corp. in Charlotte, N.C. "In the past when the new orders index has moved above 50... that has been a reliable indicator that the worst is over."
See the full text of the survey from the National Association of Purchasing Management.
Read analysis from Briefing.com on the survey.
The new-orders index rose to 53.1 from 46.3 in July. The production index climbed to 52.2 from 46.4.
The index continues to suggest modest growth in the overall economy. The latest reading of 47.9 was above the key 42.7 level -- considered the threshold between overall economic expansion and contraction.
Price pressures eased notably in August, with that index declining to 33.9 from 38.7. The reading implies that costs for manufacturers continue to be of little concern and that inflation remains at bay.
Meanwhile, the job market in the manufacturing sector remained weak, but improved slightly. The employment index rose to 40.8 from 37.2.
The survey is closely tracked because it offers an early reading on the health of the manufacturing sector. The association's index is based on a survey of purchasing executives who buy the raw materials for manufacturing at more than 350 companies.
Construction Spending Edges Lower
Separately, total spending on buildings, roads, public-works projects and homes fell 0.1% in July to a seasonally adjusted $859.4 billion annual rate from a revised $860 billion rate in June, the Commerce Department reported Tuesday. June spending was revised to a 1% fall from the 0.7% drop previously estimated, while May spending was revised to unchanged from a 0.2% drop.
Read analysis from Briefing.com on the construction-spending report.
Private construction fell 0.4% in July after falling 1.6% the previous month. Within that category, residential construction spending decreased 0.7% after falling 0.9% in June.
Nonresidential construction spending, such as office buildings, rose 0.7% after falling by 2.4% in June.
Spending on public construction, which includes roads, sewer systems and schools, rose 0.9% after rising 1.1% in June.
Total construction spending was up 8.5% on a year-to-year basis. |
