Manufacturing in US at slowest pace

economic recovery showed signs of stalling, economists said before a report yesterday.
The Institute for Supply Management’s factory index was little changed at 50,3 last month from 50,6 in August, according to the median forecast in a Bloomberg News survey.

A level of 50 is the dividing line between growth and contraction.
Construction spending fell in August, another report may show.
American producers faced with slower US demand are banking on sustained sales to emerging economies like China that have also shown signs of cooling.

In an effort to provide a boost for the recovery as concerns of a European sovereign debt default roil financial markets, the Federal Reserve last month announced another round of unconventional policy.
“Manufacturing is continuing to grow, though certainly at a much slower pace than earlier in the year,” said Eric Green, chief market economist at TD Securities Inc in New York. “Capital investment continues to grow at a slower pace. Ultimately activity will be driven by how events unfold in Europe.”

Estimates from 67 economists ranged from 45 to 52. While 50 is the midway point between expansion and contraction in the industry, a reading greater than 42,5 generally indicates an expansion in the overall economy, the group says.

Recently released surveys provided a mixed picture of manufacturing. Business at New York-region factories shrank for a fourth straight month in September and manufacturing in the Philadelphia area contracted for a third time in four months, figures from the Fed showed. The Institute for Supply Management-Chicago Inc. last week said its US business barometer rose in September to the highest level in three months.

“Significant headwinds continue to challenge the broader recovery from the 2008 financial crisis,” David Sylvester, chief financial officer at office equipment-maker Steelcase Inc, said in a September 22 conference call with analysts. “We could feel these pressures again if companies choose to behave conservatively and pull back on spending because of the uncertain landscape.”

Stocks had their biggest quarterly drop since 2008 from July through September on concerns that Europe’s debt crisis will trigger a global recession. The Standard & Poor’s 500 Index has declined for five straight months, the longest since the same period ended March 2008. – Bloomberg.