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Economic Watch: Manufacturing Slows, Construction Spending Slips

Economic activity in the manufacturing sector expanded in December for the 19th consecutive month, but it was the slowest pace in six months, according to the nation’s supply executives.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
January 5, 2015
Economic Watch: Manufacturing Slows, Construction Spending Slips

Photo: Evan Lockridge

2 min to read


Photo: Evan Lockridge

Economic activity in the manufacturing sector expanded in December for the 19th consecutive month, but it was the slowest pace in six months, according to numbers released Friday from the nation’s supply executives.

The Institute for Supply Management’s report showed the December Purchasing Managers Index registered 55.5%, a decrease of 3.2 percentage points from November’s reading of 58.7%. A reading above 50% generally indicates expansion in the manufacturing sector. One below 50% usually indicates contraction.

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Of the 18 manufacturing industries, 11 reported growth in December.

The New Orders Index registered 57.3%, a decrease of 8.7 percentage points from a reading of 66% in November. The Production Index registered 58.8%, 5.6 percentage points below the November reading of 64.4%. The Employment Index registered 56.8%, an increase of 1.9 percentage points above the November reading of 54.9%.

Comments from the survey panel were mixed, with some indicating that falling oil prices have an upside while others indicate a downside. Other comments mention the negative impact on imported materials shipment due to the West Coast dock slowdown.

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“A strong contribution to growth over the past couple of quarters, producers have maintained a strong level of activity taking advantage of record low financing costs and rapidly declining input costs – partially energy costs,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “Although, against the backdrop of extreme inventory building since April, and sluggish international demand and modest domestic demand, manufacturers are likely to slow production in the first half of 2015 to eventually eat through the existing stockpile of goods.”

Meantime, a separate report from the U.S. Commerce Department, also released Friday, showed total construction spending in the U.S. fell 0.3% in November from the month before, its first decline since June.

The performance follows an upwardly revised 1.2% increase in October from the month before and a 0.6% gain in September from August.

The November level is 2.4% higher than compared to the same time in 2013. During the first 11 months of 2014 construction spending was 5.4% higher than during the first 11 months of a year earlier.

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