The turmoil hitting credit markets last month did little to push the manufacturing sector off its path of modest expansion.
A key gauge of manufacturing activity by the Institute for Supply Management edged lower in August, but remained above its average for the last year.
The report was the latest sign that volatile financial markets have yet to cause major problems in the economy beyond an already troubled housing market.
"While there's a lot of bad news on the financial side, it doesn't seem to be creeping into manufacturing as much as one might think," said Norbert Ore, chair of the ISM's manufacturing survey committee. "The next couple of months look to be fairly strong."
The ISM's purchasing managers index slid to 52.9 in August from 53.8 in July, the private business group said yesterday. A level above 50 indicates the manufacturing economy is expanding. The index has averaged 52.5 over the last year, dropping as low as 49.3 in January.
The surveys used to compile the index are collected over the course of the month, capturing some effects of the credit crisis that grew most severe by mid-August.
The report showed that strong demand for U.S. exports continues to help manufacturers. New orders pulled back slightly, while production and employment both rose.
The volatility in financial markets could take months to ripple through the economy, and a decline in consumer confidence could threaten demand for some manufactured goods.
The housing sector's downfall, which already has weakened demand for construction materials, is expected to continue into next year.
Housing and big-ticket consumer spending are "going to take another hit in the months ahead because of tighter credit conditions, and manufacturing will feel the effect," Joshua Shapiro, chief U.S. economist at MFR Inc., said in a note to clients.
Construction spending nationwide dropped in July largely as home-building pulled back further, the Commerce Department said.
Total outlays for construction dipped 0.4% to a seasonally adjusted annual rate of $1.17 trillion. Spending for residential construction fell 1.4%, partly offset by gains in commercial and government construction outlays. Recent drops in housing starts and permits are expected to lead to more declines in residential construction spending in the coming months.
A key gauge of manufacturing activity by the Institute for Supply Management edged lower in August, but remained above its average for the last year.
The report was the latest sign that volatile financial markets have yet to cause major problems in the economy beyond an already troubled housing market.
"While there's a lot of bad news on the financial side, it doesn't seem to be creeping into manufacturing as much as one might think," said Norbert Ore, chair of the ISM's manufacturing survey committee. "The next couple of months look to be fairly strong."
The ISM's purchasing managers index slid to 52.9 in August from 53.8 in July, the private business group said yesterday. A level above 50 indicates the manufacturing economy is expanding. The index has averaged 52.5 over the last year, dropping as low as 49.3 in January.
The surveys used to compile the index are collected over the course of the month, capturing some effects of the credit crisis that grew most severe by mid-August.
The report showed that strong demand for U.S. exports continues to help manufacturers. New orders pulled back slightly, while production and employment both rose.
The volatility in financial markets could take months to ripple through the economy, and a decline in consumer confidence could threaten demand for some manufactured goods.
The housing sector's downfall, which already has weakened demand for construction materials, is expected to continue into next year.
Housing and big-ticket consumer spending are "going to take another hit in the months ahead because of tighter credit conditions, and manufacturing will feel the effect," Joshua Shapiro, chief U.S. economist at MFR Inc., said in a note to clients.
Construction spending nationwide dropped in July largely as home-building pulled back further, the Commerce Department said.
Total outlays for construction dipped 0.4% to a seasonally adjusted annual rate of $1.17 trillion. Spending for residential construction fell 1.4%, partly offset by gains in commercial and government construction outlays. Recent drops in housing starts and permits are expected to lead to more declines in residential construction spending in the coming months.
No comments:
Post a Comment