U.S. economy loses momentum as manufacturing contracts, construction spendung falls
The U.S. manufacturing sector contracted further in December, as the impact of a stronger U.S. dollar undermined export profitability, while U.S. construction spending fell for the first time in nearly 1-1/2 years in November, suggesting only moderate economic growth in the fourth quarter of 2015.
The U.S. Institute for Supply Management (ISM) said its index of national factory activity fell to 48.2 from 48.6 in November and is now at its lowest level since June 2009.
A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 indicates contraction. The reading was just below expectations of 49 from a Reuters poll of 80 economists.
The employment index fell to 48.1 from 51.3 a month earlier. Expectations called for a reading of 50.
An alternative reading from private data vendor Markit showed continued expansion in manufacturing but at a slower pace.
Markit’s purchasing managers’ index (PMI) fell to 51.2 from 52.8 in November, the lowest since October 2012.
The new orders subcomponent fell to 50.2 from 53.1, the lowest since Sept 2009.
CONSTRUCTION SPENDING FALLS
U.S. construction spending fell for the first time in nearly 1-1/2 years in November as a drop in nonresidential investment offset an increase in housing activity.
Construction spending slipped 0.4 percent, the first and also biggest drop since June 2014, after a downwardly revised 0.3 percent gain in October, the Commerce Department said on Monday.
The government revised construction data from January 2005 through October 2015 because of a “processing error in the tabulation of data.” The revisions, which showed construction spending was not as strong as previously reported for much of 2015, could prompt economists to lower their fourth-quarter gross domestic product estimates.
Growth estimates are currently hovering below a 2.0 percent annual pace. The economy expanded at a 2.0 percent rate in the third quarter. Economists polled by Reuters had forecast construction spending rising 0.6 percent in November after a previously reported 1.0 percent increase in October.
