Manufacturing Expands Moderately In November
Monday, December 3rd 2007, 12:54 pm
By: News On 6
NEW YORK (AP) _ U.S. manufacturing expanded in November as new orders and production improved, but weakness in employment suggested that industrial jobs may not be as plentiful in coming months.
The Institute for Supply Management, a Tempe, Ariz.-based trade group, said Monday that its manufacturing index registered 50.8 last month, down from 50.9 in October. A reading above 50 indicates growth; below that spells contraction.
The November results, which marked the 10th consecutive monthly expansion. were slightly stronger than the 50.1 expected by analysts polled by Thomson/IFR Markets.
``While other segments of the economy are struggling, manufacturing continues to grow due to continuing strength in new orders, and a recovery in production from last month,'' Norbert Ore, chairman of the institute's business survey committee, said in a statement. ``Prices, driven higher by energy prices, are once again the major concern.''
Wall Street stocks briefly dipped after the report was released because signs of economic strength could reduce the chances the Federal Reserve will cut rates at its Dec. 11 monetary policy meeting.
But the stock declines were limited as investors turned their attention to remarks by Treasury Secretary Henry Paulson, who reaffirmed a plan to try to stabilize the mortgage market by reducing foreclosures on adjustable rate mortgages.
In early afternoon, the market was mixed. The Dow Jones industrial average rose 18.61, or 0.14 %, to 13,390.33, as the Nasdaq composite traded higher and the S&P 500 dipped.
The manufacturing report showed a decline in the employment index to 47.8 from 52.0, indicating manufacturing jobs are contracting, according to Doug Porter, deputy chief economist at BMO Capital Markets.
``The one concern in the report is the steep drop in the employment index to a ready below 50,'' Porter said. The weak result could foreshadow a disappointing national employment report on Friday, he added.
The latest ISM index, while still showing growth, is down from its recent peak of 56.0 in June.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the decline in the headline figure last month shows that ``manufacturing has slowed substantially, but is not so weak that recession is imminent.''
According to the institute, the index for new orders rose to 52.6 in November from 52.5 in October, while production expanded to 51.9 last month from 49.6 in October.
Seven industries reported growth in November _ apparel and leather; food, beverage and tobacco; paper products; chemical products; machinery; electrical equipment, appliances and components; and computer and electronic products.
The latest report also showed strong growth in export orders, which registered a 58.5 reading in November, up from 57.0 in October.
The price index, meanwhile, advanced to 67.5 from 63.0 the month before.
Joe Patire, managing director of YieldQuest Advisors, LLC warned against reading too much into the report, given that the U.S. economy is more heavily concentrated in services than in manufacturing.
Patire said he is more interested in the ISM non-manufacturing survey for November, which will be released on Wednesday. Thomson/IFR Markets projects that the index reading for the services sector survey will fall to 53.9 from 55.8 in October.