Factory data a new sign of slowing U.S. economic growth

Tue Apr 23, 2013 1:24pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - Factory activity expanded at its slowest pace in six months in April, the latest sign that economic growth continued to lose momentum early in the second quarter, though the recovery has not been derailed.

Even as the economic picture has dimmed in recent weeks as the effects of government austerity started to filter through, strength in the housing market has provided an anchor.

New home sales in March were at their second-highest level in three years and overall house prices rose in February, other data showed on Tuesday.

"The numbers are not suggesting that the economy is surging, but none of them are really showing that the economy is falling off the cliff," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Financial data firm Markit said its "flash," or preliminary, factory purchasing managers' index fell to 52.0 this month from 54.6 in March as output, employment and new orders pulled back.

It was the lowest index level since October, though a reading above 50 does indicate growth.

While the Markit PMI has a shorter history and has been trending higher than an established, competing index from the Institute for Supply Management, its direction is in line with other surveys showing a cooling in manufacturing activity in April.

The Richmond Federal Reserve Bank said on Tuesday its gauge of factory activity in the central Atlantic region dropped into negative territory this month, pulled down by weak shipments and new orders.   Continued...

Ford Assembly workers install a battery onto the chassis of a Ford Focus Electric vehicle at the Michigan Assembly Plant in Wayne, Michigan November 7, 2012. REUTERS/Rebecca Cook