Business News

Mar 2, 10:57 AM EST

US manufacturing slows as output and hiring weaken

AP Photo
AP Photo/Paul Sancya
Business Video

Latest Business News
Yellen says Fed learning from mistakes of 2008 crisis

Target to cut $2B in costs, including several thousand jobs

Fed Chair Yellen reports small dip in assets for 2014

Why your laptop battery won't kill you

Best Buy and Orexigen are big market movers

A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
India central bank cuts key interest rate as inflation eases

A complication for the Fed: Rate cuts by other central banks

CEO group: Trade would increase hiring in US

Ukraine hikes benchmark interest rate to 30 percent

Russian state's rainy day fund drops as finances squeezed

Swiss economy stronger than expected in 4th quarter

US manufacturing slows as output and hiring weaken

Eurozone gets double dose of mildly positive economic news

Buffett says US economy continues growing at moderate rate

Puerto Rico power company delays debt restructuring plan

Buy AP Photo Reprints
Interactive about job growth
Quiz for Older Job Seekers
Who Has Lost the Jobs? A State by State Look
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

WASHINGTON (AP) -- U.S. factories expanded last month at their weakest pace in a year, with orders, hiring and production all growing more slowly.

The Institute for Supply Management, a trade group of purchasing managers, said Monday that its manufacturing index slipped to 52.9 in February from 53.5 in January. It was the fourth straight drop and the lowest reading since January 2014. Still, any reading above 50 signals expansion.

The ISM's measures of production and employment fell sharply, though they remained in expansionary territory. That suggests that factories are still adding jobs but at a slower pace than in January.

U.S. manufacturers have been held back in recent months by weak growth in China, Europe and Japan. That's been partly offset by strong consumer demand in the United States.

Overall, factory growth is still boosting the U.S. economy, but at a more sluggish pace than it did last year. The ISM's index reached a three-year high of 58.1 in August.

Some respondents to the ISM's survey blamed a labor slowdown at West Coast ports for disrupting shipments of needed parts and materials. That dispute has since been resolved, a breakthrough that could give factories a small boost in coming months.

"Even allowing for that disruption, a reading of 52.9 is no reason to panic," said Paul Ashworth, chief U.S. economist at Capital Economics, a forecasting firm. "It still points to modest overall growth."

Still, overseas demand has now contracted for two straight months. A measure of export orders dropped to 48.5 in February from 49.5 in January.

A strengthening dollar, which makes U.S. exports more expensive overseas, has also been a drag. The trade deficit - the amount by which the value of U.S. imports exceeds that of exports - widened in the October-December quarter. The deficit subtracted 1.1 percentage points from the economy's growth rate for the quarter. The economy expanded at a 2.2 percent annual rate in the fourth quarter, down sharply from a 5 percent pace in the July-September quarter.

The stronger dollar is also squeezing U.S. multinational corporations' overseas profits.

Another drag has come from U.S. businesses, which are investing less in industrial machinery and other equipment. Oil drilling firms are spending less on developing new fields as the price of oil has plummeted roughly 50 percent since June. Business investment in equipment rose just 0.9 percent in the fourth quarter.

On the brighter side, lower gas prices have left Americans with more money to spend on other goods and services. Consumer spending jumped by the most in nine years in last year's fourth quarter. In January, consumer spending rose a solid 0.3 percent, after adjusting for prices, which fell last month.

More spending is keeping some factories busy. Auto sales jumped 14 percent in January from a year earlier, the best January sales in nine years. Analysts expect sales to top 17 million this year for the first time in a decade.

Greater production of consumer goods, such as furniture, computers and clothing, increased factory output in January, according to the Federal Reserve.

© 2015 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

  • 490 First Avenue South
  • St. Petersburg, FL 33701
  • 727-893-8111