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Manufacturing grows at slower pace in February

Associated Press Modified: March 1, 2012 at 10:00 am •  Published: March 1, 2012

WASHINGTON (AP) — Manufacturing activity grew more slowly in February as U.S. factories received fewer new orders and paid higher prices for raw materials.

The Institute for Supply management, a trade group of purchasing managers, said Thursday that its manufacturing index fell last month to 52.4 from 54.1 in January.

The reading was the lowest since November. Still, any reading above 50 indicates expansion.

New orders increased, but at a far slower pace than the month before. Production and employment also grew more slowly.

Exports increased sharply, a sign that Europe's debt crisis has not yet dampened overseas sales by U.S. factories as many had feared.

U.S. factory activity has expanded for 31 straight months, according to the index.

The report "is hardly a disaster, but it does support our view that the economy is not quite as strong as recent data have led others to believe," said Paul Dales, senior U.S. economist with Capital Economics, in a note to clients.

New orders remain strong, suggesting that the factories will continue to grow, Dales said. But he said the slowdown in hiring suggests that factory payrolls stopped growing after they added an impressive 50,000 jobs in January.

Mixed reports from Asia and Europe appeared to confirm that the global economic recovery is on track, but uneven.

China's factory activity strengthened in February, helped by a surge in new orders, exports and production, according to a government survey of purchasing managers. It was the best reading since June and the third straight month of improvement for the index.

Japan had said a day earlier that the country's factory production rose for a second month in January.

Yet in Europe, manufacturing continued to contract, dragged down by record-low readings in Greece and slowing production in Spain, Italy and Ireland. Some of the 17 nations using the euro are in deep recession; others are teetering on the brink.

The European manufacturing purchasing managers index edged up to 49 from 48.8 in January, according to Markit, the data firm that compiles the survey. Growth in Austria, the Netherlands and Germany offset weakness elsewhere. It was the best reading in six months. Still, any reading below 50 indicates contraction.

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