Manufacturing Leads The Economy Out Of The Recssion
WASHINGTON (AP) — The manufacturing sector likely grew in October for the 15th straight month, but at the slowest pace in almost a year.
Economists expect that the Institute for Supply Management's index of manufacturing activity will drop to 54, according to a survey from Thomson Reuters, from 54.4 in September. Any reading above 50 indicates the sector is growing. The ISM will issue the report at 10 a.m. Monday.
Auto makers and other manufacturers led the economy out of the recession, as companies replenished their stockpiles of goods, which had been cut to the bone during the recession. But for manufacturers to keep boosting output, consumers will have to spend more.
That would encourage companies to keep buying goods, even after their inventories are rebuilt.
The economy grew by a weak 2 percent annual rate in the third quarter, the government said Friday. Inventory provided about 1.4 percentage points of that growth. That support from inventories won't likely last much longer.
Still, consumers did increase their spending by 2.6 percent in the July-September quarter, the fastest pace in almost four years.
The ISM's manufacturing index rose to 60.4 in April, the highest level since June 2004. The index had bottomed out at 32.5 in December 2008, the lowest since June 1980.
The ISM surveys purchasing managers at about 350 companies around the country to compile the index.
Auto makers have recently reported healthy growth. Ford Motor Co. said on Tuesday that it made $1.7 billion in profit in the third quarter, a jump of 70 percent from a year earlier. The company has said it will add 500 new workers at a plant in Chicago that makes the Ford Explorer SUV, its first major hiring in years.
General Motors Co. has said it will add a new small car to its Cadillac lineup. It plans to spend $190 million to upgrade a factory in Michigan to build the car, and will add 600 jobs.