Updated from 11:14 a.m. EDT
Activity in the manufacturing sector continued to grow in June, although at the slowest rate since January 1999, according to the monthly survey by the
National Association of Purchasing Management
The NAPM said its broad index of activity in U.S factories fell to 51.8, compared to 53.2 in May. Any reading above 50 means business is growing for manufacturers; the decline in June denotes slower growth in factory activity.
The other indicators released by the NAPM, such as measures of prices, employment and new orders, also reflected slower growth in the nation's factories. The numbers fell below a survey by
, which predicted an index of 53.
"The manufacturing sector is clearly becoming a pocket of softness," said Anthony Karydakis, senior financial economist at
BancOne Capital Markets
, who was expecting an increase in the growth rate of factory activity, in the 53.5 to 54 range. "It is clearly consistent with a picture of a slowing economy."
Karydakis said the financial markets are unlikely to take cues from this data and conclude that the
is finished tightening interest rates. Instead, Wall Street will be much more focused on Friday's employment report for an indication of whether further rate increases are likely, he said. The Federal Reserve left its target federal funds rate
unchanged at its last meeting June 28, although it said it was still worried about inflation.
The new data appeared to have little impact on the markets, as the
Dow Jones Industrial Average
was 8.84 points, at 10,456.73 Monday morning.
Federal Open Market Committee
, which sets interest rate policy, has raised rates by a total of 1.75 percentage points in six increments over the last year, in an effort to slow the economy.
The NAPM compiles its data from surveys of purchasing managers at more than over 350 industrial companies.
said that construction spending in May was essentially flat at $809.3 billion, compared to $808.2 billion in April. The May figure was 7% higher than a year ago.