WASHINGTON – The nation's manufacturing sector expanded at its slowest clip in more than three years in October, a trade group said Wednesday.
The Institute for Supply Management, based in Tempe, Ariz., said its manufacturing index registered 51.2 in October, below September's reading of 52.9.
It was the index's lowest level since June 2003 and reflected persistently high raw material prices and a decline in new orders, according to data provided by purchasing and supply executives.
Analysts had been expecting a reading of 53.
A reading of 50 or more indicates expansion, while below 50 shows contraction. The October figure represented the 41st consecutive month of growth.
The ISM's employment index grew to 50.8 in October from 49.4 in September. The prices paid index fell to 47 in October from 61.0 in September. The new orders index fell to 52.1 in October from 54.2 in September, while the customers' inventories rose to 52 from 49 in September.
The eight industries that reported growth in October were: apparel, leather and allied products; miscellaneous manufacturing; computer and electronic products; food, beverage and tobacco products; nonmetallic mineral products; furniture and related products; chemical products; and paper products.
Global Insight industrial economist Tom Runiewicz said the manufacturing sector is likely to experience much slower growth in 2007, perhaps 2.5 percent on an annualized basis, compared with an estimated 5.2 percent in 2006.
Runiewicz' prediction assumes a slowdown in housing, a decline in consumer spending for big-ticket items such as cars and appliances because of stubbornly high energy prices and less corporate investment in everything from heavy machinery to personal computers.
Stock prices fell in early trading Wednesday on Wall Street. The Dow Jones industrials declined 5.6 to 12,076.33, while the Nasdaq composite index slipped 2.74 to 2,363.97. The broader Standard & Poor's 500 index fell 0.36 to 1,377.58.