Bloomberg News | Manufacturing probably expanded in September at the slowest pace in 10 months, underscoring the Federal Reserve’s forecast of “modest” U.S. growth, economists said before reports today.
The Institute for Supply Management’s factory index dropped to 54.5 from 56.3 in August, according to the median estimate of 83 economists surveyed by Bloomberg News. Readings greater than 50 signal growth. Other reports may show consumer confidence fell, construction dropped for a fourth straight month, and consumer spending cooled.
Companies such as Cisco Systems Inc. are seeing signs of slower growth and limited hiring in the U.S. even as manufacturers benefit from improving overseas markets. Noting smaller gains in business investment, the Fed last week said it stands ready to do more to ensure the world’s largest economy keeps growing.
The slowdown in manufacturing “appears orderly,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “Additional monetary stimulus may be needed, especially if the downshift in manufacturing intensifies.”
The Tempe, Arizona-based ISM’s report is due at 10 a.m. New York time. Estimates in the Bloomberg survey ranged from 51.5 to 57.
As manufacturing cools, a renewed slowdown in the housing market following the expiration of a homebuyer incentive is depressing construction. Spending on all projects dropped 0.4 percent in August after a 1 percent decline a month earlier, according to the median estimate of economists surveyed before a Commerce Department report at 10 a.m.
Consumer Sentiment
American consumers were less optimistic in September, a Thomson Reuters/University of Michigan survey is forecast to show at 9:55 a.m. New York time. The median estimate in the Bloomberg survey is for a final September reading of 67, the weakest since August 2009, down from 68.9 a month earlier.
Consumers are reining in purchases, a Commerce Department report at 8:30 a.m. may show. Spending rose 0.3 percent in August after a 0.4 percent gain, according to the median estimate in a Bloomberg survey. Incomes may have increased 0.3 percent after a 0.2 percent rise, the survey showed.
The economic recovery from the worst recession since the 1930s that began in June 2009 has been led by manufacturing as exports climbed, business investment improved and inventory were replenished. The rebuilding of stockpiles has since slowed.
