Updated from 11:39 a.m. EST
Activity in the manufacturing sector declined in October for the third straight month, according to the monthly survey by the
National Association of Purchasing Management
, offering one more bit of evidence that the U.S. economy is slowing.
The NAPM survey provided further evidence of slower economic growth, even though another report released Wednesday on
showed a surprising increase of 2.4% in September.
The NAPM said its broad index of activity in U.S. factories fell to 48.3 in October, a decrease of 1.6 percentage points from 49.9 in September. Any reading above 50 means business is growing for manufacturers, while a reading below 50 indicates that activity is slowing.
The figure marked the lowest level since December 1998 and was a sharper decline than the 49.8 reading expected by a group of economists polled by
The other indicators released by the NAPM, such as measures of prices, employment and new orders, also reflected a slowdown in the manufacturing sector.
The data likely cements the view that the
will leave interest rates unchanged at its policy-making meeting on Nov. 15, said James O'Sullivan, an economist at
, although the October employment data scheduled to be released Friday will be closely watched. "We will wait for Friday's employment report before making the final call," he said.
Over the last 17 months, the Fed has raised rates six times in an effort to tame economic growth and head off inflation. A flurry of economic data in recent months has indicated that the Fed's efforts have proved successful, and policymakers left rates unchanged at its August and October meetings.
But the economy grew at a slower rate than most economists expected in the third quarter, as measured by the government's first estimate of the nation's
gross domestic product, released last Friday. That report led some economists to predict that a rate cut could be on the horizon if growth remains sluggish. Growth rose at a 2.7% annual rate, compared with a 5.6% rise in the second quarter.
A strong dollar, high energy prices and high interest rates took their toll on manufacturers in October, according to the NAPM, which compiles its data from surveys of purchasing managers at more than 350 industrial companies.
"The overall picture is one of continued softening in the manufacturing activity during the month of October," said Norbert Ore, chairman of the NAPM. "There are few signs of encouragement in this month's report, and the comments from survey respondents indicate significant concerns about current market conditions."
The new export orders index fell to 48.3% in October, the first time that exports have contracted in nearly two years, according to Michael Burt, an analyst at
. "With foreign demand weakening alongside domestic demand, there is little potential for improvement in the manufacturing industry in the near-term," he said.
The national figure follows Tuesday's
release of the
Chicago Purchasing Managers Index
for October, which also showed a contraction, with the index falling to 48.7 compared with 51.4 in September. Also Tuesday, another report pointed to a slowdown in the economy as consumer confidence dropped sharply in October.
said construction spending in September rose 2.4% from the previous month, exceeding an increase of 0.4% expected by economists surveyed by
. The gain was the biggest in 10 months and follows a 1.8% increase in August.
Construction spending reached an annual rate of $819.3 billion, compared with $800.3 billion in August.
The increase was a result of a surge in spending for commercial, industrial and public housing spending, while private residential construction was up modestly. A separate report Tuesday, however, showed that sales of new homes were strong in September, rising an unexpected 9.2%.