Manufacturing Activity Expands At Slower Pace In November

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While the Institute for Supply Management released a report on Tuesday showing a continued increase in economic activity in the manufacturing sector in November, the pace of growth slowed by more than economists had been expecting.

The ISM said its index of activity in the manufacturing sector fell to 53.6 in November from 55.7 in October, although a reading above 50 still indicates growth in the sector. Economists had been expecting a more modest decrease to a reading of 55.0.

Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee said, "While the rate of growth slowed when compared to October, the signs are still encouraging for continuing growth as both new orders and production are still at very positive levels."

"Overall, the recovery in manufacturing is continuing, but many are still struggling based on their comments," Ore added.

The report showed that the new orders index rose to 60.3 in November from 58.5 in October, while the production index slipped to 59.9 from 63.3 in the previous month.

Additionally, the employment index edged down to 50.8 in November from 53.1 in October, although it remained above the key 50 level for the second straight month.

The ISM also said that the prices index fell to 55.0 from 65.0 in the previous month, which Ore said signals less inflationary pressure on manufacturers' costs.

At the same time, the report showed that the inventories index fell to 41.3 in November from 46.9 in October, indicating a faster pace of contraction in inventories.

Dimitry Fleming, an economist at ING, said, "The inventory numbers are actually consistent with a re-acceleration of destocking, which could weigh on fourth quarter GDP growth."

On Thursday, the ISM is due to release its report on activity in the service sector in the month of November. Economists expect the index of activity in the sector to edge up to 51.5 from 50.6 in the previous month.

While the Institute for Supply Management released a report on Tuesday showing a continued increase in economic activity in the manufacturing sector in November, the pace of growth slowed by more than economists had been expecting. The ISM said its index of activity in the manufacturing sector fell to 53.6 in November from 55.7 in October, although a reading above 50 still indicates growth in the sector. Economists had been expecting a more modest decrease to a reading of 55.0. (Market News Provided by RTTNews)