Teh One Who Knocks
12-03-2012, 06:35 PM
The Associated Press
WASHINGTON (AP) — Manufacturing shrank to the lowest level since July 2009, the first month after the recession ended, according to a purchasing managers survey out Monday.
The impact of Superstorm Sandy and worries about the "fiscal cliff" -- automatic tax increases that could take effect in January -- combined to reduce factory orders and manufacturing jobs.
The Institute for Supply Management says its index of manufacturing conditions fell to a reading of 49.5. That's down from 51.7 in October. A reading above 50 signals expansion, while readings below 50 point to contraction. The index contracted after two months of growth.
In a separate report, builders increased spending on construction projects in October by the largest amount in five months, led by a surge in housing.
The Commerce Department said Monday that construction spending rose 1.4% in October. It was the largest gain since a 1.7% increase in May.
The increase increased construction spending to a seasonally adjusted annual rate of $872.1 billion. That is nearly 17% higher than a 12-year low hit in February 2011.
Still, even with the gain, the level of spending remains only about half of what's considered healthy.
Housing construction jumped 3% in October. Nonresidential construction rose 0.3%. The government said Superstorm Sandy, which hit in late October, had only a minimal impact on the figures.
The government said earlier this month that sales of new homes fell slightly in October, dragged lower by steep declines in the Northeast partly related to Superstorm Sandy. New-home sales were still 17% higher in October than the same month a year ago.
Strength in home building has been one of the bright spots for the economy this year. But overall construction is still being offset by weakness in commercial real estate and tight state and local government budgets.
From July through September, residential construction grew at an annual rate of 14.2%. Housing construction is on track to contribute to economic growth this year — the first time that's happened in the five years since the housing bubble burst.
Though new homes represent only a fraction of the housing market, they have an out-size impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.
Builders are increasingly confident that the housing recovery will endure. A measure of their confidence rose in November to the highest level in 6½ years. And builders broke ground on new homes and apartments in October at the fastest pace in more than four years.
But there are factors dragging on the housing recovery. Many Americans, particularly first-time homebuyers, are unable to qualify for a mortgage. And many can't afford larger down payments that are being required by banks.
While housing has strengthened this year, the broader economy has lagged behind. The government reported last week that overall economic growth increase to an annual rate of 2.7% in the July-September quarter, up from 1.3% in the April-June quarter.
But through the first nine months of this year, economic growth has averaged just 2%, far below what is needed to make a significant dent in unemployment.
Many analysts believe growth is slowing in the current October-December quarter to below 2%. The disruptions caused by Superstorm Sandy weighed on consumer spending in October.
And many consumers and businesses may also be worried about automatic tax increases and spending cuts that are scheduled to kick in next year, if Congress and the Obama administration fail to reach a deal before then to avert them.
WASHINGTON (AP) — Manufacturing shrank to the lowest level since July 2009, the first month after the recession ended, according to a purchasing managers survey out Monday.
The impact of Superstorm Sandy and worries about the "fiscal cliff" -- automatic tax increases that could take effect in January -- combined to reduce factory orders and manufacturing jobs.
The Institute for Supply Management says its index of manufacturing conditions fell to a reading of 49.5. That's down from 51.7 in October. A reading above 50 signals expansion, while readings below 50 point to contraction. The index contracted after two months of growth.
In a separate report, builders increased spending on construction projects in October by the largest amount in five months, led by a surge in housing.
The Commerce Department said Monday that construction spending rose 1.4% in October. It was the largest gain since a 1.7% increase in May.
The increase increased construction spending to a seasonally adjusted annual rate of $872.1 billion. That is nearly 17% higher than a 12-year low hit in February 2011.
Still, even with the gain, the level of spending remains only about half of what's considered healthy.
Housing construction jumped 3% in October. Nonresidential construction rose 0.3%. The government said Superstorm Sandy, which hit in late October, had only a minimal impact on the figures.
The government said earlier this month that sales of new homes fell slightly in October, dragged lower by steep declines in the Northeast partly related to Superstorm Sandy. New-home sales were still 17% higher in October than the same month a year ago.
Strength in home building has been one of the bright spots for the economy this year. But overall construction is still being offset by weakness in commercial real estate and tight state and local government budgets.
From July through September, residential construction grew at an annual rate of 14.2%. Housing construction is on track to contribute to economic growth this year — the first time that's happened in the five years since the housing bubble burst.
Though new homes represent only a fraction of the housing market, they have an out-size impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders.
Builders are increasingly confident that the housing recovery will endure. A measure of their confidence rose in November to the highest level in 6½ years. And builders broke ground on new homes and apartments in October at the fastest pace in more than four years.
But there are factors dragging on the housing recovery. Many Americans, particularly first-time homebuyers, are unable to qualify for a mortgage. And many can't afford larger down payments that are being required by banks.
While housing has strengthened this year, the broader economy has lagged behind. The government reported last week that overall economic growth increase to an annual rate of 2.7% in the July-September quarter, up from 1.3% in the April-June quarter.
But through the first nine months of this year, economic growth has averaged just 2%, far below what is needed to make a significant dent in unemployment.
Many analysts believe growth is slowing in the current October-December quarter to below 2%. The disruptions caused by Superstorm Sandy weighed on consumer spending in October.
And many consumers and businesses may also be worried about automatic tax increases and spending cuts that are scheduled to kick in next year, if Congress and the Obama administration fail to reach a deal before then to avert them.