Manufacturing in U.S. Expands Less Than Forecast

Oct. 1 (Bloomberg) -- U.S. manufacturing expanded last month at a slower pace than anticipated by economists, a report from the Institute for Supply Management showed.

The ISM’s factory gauge decreased to 52.6 from 52.9 in August, the Tempe-Arizona-based group said today. Fifty is the dividing line between expansion and contraction.

Today’s report comes a day after another private business gauge found activity contracted last month. With excess capacity close to a record, companies have little reason to hire new workers or ramp up production until they see stronger gains in demand. The manufacturing recovery may be uneven as stimulus programs such as “cash for clunkers” expire, economists said.

“We’re still in positive territory but we’re just not advancing at quite the same rate,” said Brian Bethune, chief financial economist at IHS Global Insight Inc. in Lexington, Massachusetts. “Retailers are anticipating a weak sales season and they’re playing it conservative on orders and hiring.”

Stocks tumbled after the report, with the Standard & Poor’s 500 Index falling 1.4 percent to 1,042.41 at 10:18 a.m. in New York a day after completing its biggest back-to-back quarterly rally since 1975.

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Second straight month of "expansion".


The level wasn't as high as some hoped, but the trajectory is good.