Business Excellence Awards
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By Alex Kowalski
WASHINGTON - Manufacturing in the U.S. probably cooled in November as business demand slowed and disruptions from superstorm Sandy limited production, according to economists surveyed before a report today.
The Institute for Supply Management’s factory index fell to 51.5 from 51.7 in October, according to the median estimate of 75 economists surveyed by Bloomberg. A reading of 50 marks the dividing line between expansion and contraction. Other figures today may show construction spending increased in October.
Less corporate spending on equipment as lawmakers debate the nation’s budget, weaker orders from overseas and disturbances related to the biggest Atlantic storm ever to hit the U.S. are converging to slow manufacturing. A pickup in home construction as well as rebuilding in the wake of Sandy may offer the economy a lift as support from factories wanes.
“There is uncertainty from the fiscal cliff, Europe is still going down, and then you’ve got Sandy,” said Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania. “Housing is going to be a solid aspect for several years to come.”
The Tempe, Arizona-based ISM will release the report at 10 a.m. New York time. Estimates ranged from 49 to 53.5. The gauge averaged 55.2 in 2011 and 57.3 in 2010.
Other reports today showed euro-area manufacturing kept contracting in November while factory output rose in China and Russia, underscoring the divergence of the global economic recovery.
Manufacturing output in the 17-nation euro area shrank for a 16th month, with a gauge of manufacturing rising to 46.2 from 45.4 in October. In China the Purchasing Managers’ Index climbed 50.6 and in Russia it expanded for a 14th month.
Recent U.S. regional reports show manufacturing, which accounts for about 12 percent of the U.S. economy, weakened last month. Factory activity in the New York area contracted in November for the fourth consecutive month as Sandy knocked out electrical power and limited activity, disrupting about 70 percent of businesses that were surveyed by the Federal Reserve. Output in the Philadelphia-area shrank for the sixth time in seven months.
Seven of 12 Fed districts reported “either slowing or outright contraction in manufacturing,” the central bank said last week in its Beige Book business survey, which reflected information collected before Nov. 14. The Cleveland, Richmond and St. Louis areas said business was positive.