Factory Growth and Spending Slow

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U.S. manufacturing has been one of the few bright spots in the global economy, but growth cooled in February. The Institute for Supply Management reported this morning that its index of national factory activity fell from 54.1 last month to 52.4, short of the expected 54.5.

Christopher Low, an economist at FTN Financial in New York, said, “The ongoing global challenges are part of what we’re seeing in the number today.”

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As factory growth slows, other economic hurdles continue to pop up, painting an all-to-real picture of our spending situation. “Things aren’t so rosy in the garden and the consumer is still facing significant headwinds here,” said Ray Attrill, head of currency strategy for North America BNP Paribas in New York.

Consumer spending and a big gain in inventories caused the economy to grow at a rapid 3 percent annual rate during the tail-end of 2011.┬áBut an increase in inflation — the result of higher rents and gasoline prices — could be taking its toll on consumers.

Spending rose 0.2 percent in January, falling short of analysts’ expectations, and was flat after adjusting for inflation, as was the case in November and December as well.

The slowdown in manufacturing and spending could affect what has been an otherwise positive economic outlook in the U.S., as household purchases account for a huge portion of the economy.

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To contact the reporter on this story: Lindsey Grossman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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