U.S. manufacturing expanded in November as new orders and production improved, but the pace of growth was a touch weaker than the prior month.
The Institute for Supply Management, a Tempe, Ariz.-based trade group, said Monday that its manufacturing index registered 50.8 last month, down from 50.9 in October. A reading above 50 indicates growth; below that spells contraction.
The results were slightly stronger than the 50.1 expected by analysts polled by Thomson/IFR Markets.
“Manufacturing continued to grow during November, a trend that is now in its 10th month,” Norbert Ore, chairman of the institute’s business survey committee, said in a statement.
“While other segments of the economy are struggling, manufacturing continues to grow due to continuing strength in new orders, and a recovery in production from last month,” he said. “Prices, driven higher by energy prices, are once again the major concern.”
Wall Street stocks briefly dipped after the report was released because signs of economic strength could reduce the chances the Federal Reserve will cut rates at its Dec. 11 monetary policy meeting.
But the stock declines were short-lived as investors turned their attention to remarks by Treasury Secretary Henry Paulson, who reaffirmed a plan to try to stabilize the mortgage market by reducing foreclosures on adjustable rate mortgages.
In midmorning, the market was largely flat in midmorning trading. The Dow Jones industrial average rose 8.37, or 0.06 percent, to 13,380.09. Broader stock indicators fell.
The manufacturing report showed a decline in the employment index to 47.8 from 52.0, indicating manufacturing jobs are contracting, according to Doug Porter, deputy chief economist at BMO Capital Markets.
“The one concern in the report is the steep drop in the employment index to a ready below 50,” Porter said. The weak result could foreshadow a disappointing national employment report on Friday, he added.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said the slight decline in the headline figure last month shows that “Manufacturing has slowed substantially, but is not so weak that recession is imminent.”
According to the institute, the index for new orders rose to 52.6 in November from 52.5 in October, while production expanded to 51.9 last month from 49.6 in October.
Seven industries reported growth in November — apparel and leather; food, beverage and tobacco; paper products; chemical products; machinery; electrical equipment, appliances and components; and computer and electronic products.
The latest report also showed strong growth in export orders, which registered a 58.5 reading in November, up from 57.0 in October.
The price index, meanwhile, advanced to 67.5 from 63.0 the month before.