US Manufacturing Grows at Fastest in 2½ Years

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A fall in aircraft demand drove the decline. But companies also spent less on machinery, computers and metal parts. The weak showing suggests that businesses might have been reluctant to order more goods during the 16-day partial government shutdown in October.

One reason for the divergence could be that the ISM’s index doesn’t adequately measure smaller manufacturers, according to Ian Shepherdson, an economist at Pantheon Macroeconomics. Larger companies are likely benefiting more from recoveries overseas.

Separate reports Monday showed that manufacturers in China and Europe expanded in November, though more slowly than in the United States. Still, factories in Europe grew at the fastest pace in nearly two years, according to a survey by Markit.

Another reason for the conflicting reports may be that production of non-durable goods appears to be stronger than production of durable goods. For example, the ISM report showed that manufacturing in non-durable areas like the food, textiles, petroleum, chemical and paper products industries grew. At the same time, some durable goods industries, such as machinery, contracted in November.

Some respondents to the ISM’s survey said federal spending cuts and budget battles in Washington limited business spending on durable goods last month.

Separately, factory output rose for a third straight month in October, according to the Federal Reserve, driven higher by greater production of primary metals and furniture.

The mixed picture comes as the economy is thought to be slowing in the October-December quarter to an annual rate of 2 percent or less. That would be down from a 2.8 percent annual pace in the July-September quarter.

Much of the third quarter’s growth was due to companies rebuilding their stockpiles. The economy is unlikely to benefit from a similar trend in the current quarter.

(Photo: AP)

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