Manufacturing in The U.S. Probably Expanded at a Slower Pace in April

Manufacturing in the U. S. Probably expanded at a slower pace in April than a month earlier, indicating the industry that spurred the recovery almost three years ago is cooling, economists said before a report today. The Institute for Supply Management’s factory index eased to 53 last month from 53.4 in March, according to the median estimate of 77 economists surveyed by Bloomberg News. Readings greater than 50 signal growth. Construction spending rose in March for the first time in three months, other data may show. Less demand for business equipment, a smaller buildup in inventories and recession in Europe may limit orders and production at U. S. Factories. A further strengthening of the economic expansion that began in June 2009 may require faster growth in manufacturing along with sustained gains in the services industry. “Overall, manufacturing is slowing down a little bit, but it did have a pretty good first quarter, partly because of the car industry, ” said Harm Bandholz, chief U. S. Economist at UniCredit Group in New York. “The U. S. Economy really needs to see a stronger goods-producing sector this year. ” The Tempe, Arizona-based ISM’s manufacturing report is due at 10 a. M. New York time. Estimates ranged from 52 to 54.0. The gauge averaged 55.2 in 2011 and 57.3 a year earlier. At 10 a. M., the Commerce Department will release data on construction spending. Economists project a 0.5 percent gain after a 1.1 percent drop in February, according to the Bloomberg survey median. Forecasts ranged from a decrease of 0.8 percent to an increase of 1 percent. U. K. Manufacturing Elsewhere, a U. K. Manufacturing index fell more than forecast in April as export orders declined the most since May 2009. A gauge of factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, dropped to 50.5, the lowest this year, from a revised 51.9 in March, Markit said on its website today. The median forecast in a Bloomberg survey called for a decline to 51.5 from an initial March estimate of 52.1. China’s manufacturing expanded for a fifth month in April, reducing pressure on policy makers to open the taps on credit in the world’s second-largest economy. The Purchasing Managers’ Index rose to 53.3 from 53.1 in March, China’s statistics bureau and logistics federation said in a statement today. That’s the highest reading in a year. Regional Figures Recent regional reports indicate manufacturing, which accounts for about 12 percent of the total economy, is expanding less vigorously than last year. New York-area factories grew at the slowest pace in five months in April, and manufacturing in the Philadelphia region expanded at a slower pace last month, according to figures from the Federal Reserve. Business spending on equipment and software in the first quarter rose at a 1.7 percent pace, the weakest in almost three years, a Commerce Department report showed last week. Other data last week showed orders for non-defense capital goods excluding aircraft -- a proxy for business investment in items such as computers and communications gear -- decreased 0.8 percent in March. Overseas demand for U. S. Made-goods also risks fading as global growth slows. Spain’s economy contracted in the first quarter, putting the euro region’s fourth-largest economy into its second recession since 2009. The U. K. Shrank 0.2 percent in the first quarter after contracting 0.3 percent in the prior three months as Britain slid into its first double-dip recession since the 1970s. Global Economy ‘Uneven’ “The global economy is uneven, ” John Faraci, chairman and chief executive officer of International Paper Co. (IP), said during an April 27 earnings call. “We got a recession going on in Western Europe. The growth has slowed in China and India. And North America is a recovering but far from fully recovered economic environment. ” At the same time, stronger auto production bolstered the U. S. Economy from January through March, which may keep support manufacturing. Motor vehicle output added 1.12 percentage points to growth, the most since the third quarter of 2009. Cars last quarter sold at the fastest pace in four years, according to industry data. Manufacturers mentioned gains in automotive and high- technology industries, the Fed said in its Beige Book business survey, published April 11. The firms “expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices, ” the Fed said in the report. 3M Co., the maker of fuel system tune-up kits and Post-it Notes, posted first-quarter profit that beat analysts’ estimates because of rising U. S. Auto and industrial demand. The St. Paul, Minnesota-based company’s industrial and transportation unit posted sales of $2.66 billion, an 8.6 percent increase. Manufacturing shares are still outperforming the market. The Standard & Poor’s Supercomposite Industrial Machinery Index (S15MACH), which includes Caterpillar Inc. And Deere & Co., advanced 14 percent since the end of 2011 through yesterday, compared with an 11 percent increase in the broader S&P 500. Source: bloomberg.com