U.S. manufacturing cools, but underlying momentum remains
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. factory activity moderated in November, but sustained gains in new orders and a rebound in exports suggested the economy remained on a firmer footing despite slowing global growth.
The Institute for Supply Management (ISM) said on Monday its index of national factory activity fell to 58.7 last month as the pace of restocking slowed. The index had touched a 3-1/2-year high of 59 in October.
A reading above 50 indicates expansion in the nation's manufacturing sector.
"The world economy may be faltering, but that is not stopping the U.S. economy from improving," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
A separate report from financial data firm Markit showed its U.S. Manufacturing Purchasing Managers index fell to a 10-month low of 54.8 in November from a reading of 55.9 in October. But this survey has a short history, making it a less reliable gauge of U.S. manufacturing activity.
Other reports showed manufacturing growth across Asia and Europe easing in November.
There had been concerns that weak global demand was undercutting U.S. manufacturing after data last week showed a second straight month of declines in planned business spending on equipment in October.
U.S. stocks were trading lower on concerns about the global economy. Consumer stocks also were pressured due to disappointing in-store retail sales for the Thanksgiving weekend, traditionally a major shopping period.
Prices for shorter-dated U.S. Treasury debt slipped and the dollar fell against a basket of currencies.
The ISM survey showed new orders increased to their highest level since August, while export order growth also accelerated.
Survey respondents reported "substantial" order intake for machinery, which they said had resulted in "a very healthy backlog." Furniture manufacturers said business continued to be "stronger than last year."
"There is no sign that the stronger dollar and/or the weakness seen globally is negatively impacting manufacturing in the U.S.," said Michelle Girard, chief economist at RBS in Stamford, Connecticut.While a measure of factory employment ebbed a bit in November, it remained consistent with solid job growth. Electrical equipment, appliances and components manufacturers said they continued to hire people. They also noted that people were leaving to take other jobs.
Falling commodity prices, especially crude oil, saw a gauge of prices paid by factories falling to its lowest level since July 2012.
"This price dynamic is a positive for corporate profits and signals lower inflation pressures in the economy," said John Silvia, chief economist at Wells Fargo Securities in Charlotte, North Carolina.
(Reporting by Lucia Mutikani; Additional reporting by Sam Forgione in New York; Editing by Paul Simao)
