Factory growth eases in October, no recession seen

Tue Nov 1, 2011 1:43pm EDT
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By Leah Schnurr

NEW YORK (Reuters) - The pace of growth in U.S. manufacturing slowed last month, though improvement in October new orders suggested stable but slow growth for the U.S. economy.

While the survey from the Institute for Supply Management on Tuesday frustrated expectations for a pick-up in factory activity, analysts said the report bolstered views that the U.S. economy would avoid another recession.

The index of national factory activity dipped to 50.8 in October from 51.6 the month before, missing expectations of 52.0. A number above 50 signals expansion.

But in a positive sign, the ISM new orders index rose above 50 for the first time in four months, to 52.4 from 49.6, while the prices paid index fell to its lowest level since April 2009, to 41.0 from 56.0.

"There is no question that manufacturing activity has slowed a bit in response to the weakness that we are seeing out of Europe," said Mark Vitner, senior economist at Wells Fargo Securities in Charlotte, North Carolina.

"What this report really highlights is that the economy is really still stuck in slow growth mode, and we are unlikely to shake that any time soon."

The data came as the Federal Reserve began its two-day policy-setting meeting. The central bank's statement due on Wednesday may provide hints on how close it is to expanding asset purchases.

Fears the economy could be heading for another recession have ebbed in recent months as growth accelerated in the third quarter after a weak performance in the first half of 2011.   Continued...