Growth in U.S. factory activity slipped in November to the lowest since January as tight credit conditions and the housing downturn restrained production, according to an industry report released Monday.
The Institute for Supply Management said its index of national factory activity edged down for the fifth straight month, to 50.8 from 50.9 in October, above economists' median forecast for a slip to 50.5. A reading of 50 denotes growth.
The November employment index slipped to 47.8 from 52.0, to mark its lowest reading since September 2003.
Treasury prices slightly pared gains and U.S. stocks fell slightly after the report.
U.S. interest rate futures eased but still fully priced in a quarter-percentage-point cut in the federal funds target interest rate at the Dec. 11 Federal Reserve policy meeting.
"The news coming out of the financial sector is all gloom and doom but manufacturing is holding its own pretty well," said Norbert Ore, chairman of the ISM Manufacturing Business Survey Committee in Atlanta, Georgia.
"Manufacturing is at a fairly high level. Supply and demand is strong in most sectors. But we're kind of plateauing there," Ore said.
"We did see a change in employment and we'll have to see if that's a continuing trend toward lower employment in manufacturing. But given some of the other concerns in the economy, manufacturing is doing well," Ore said.
The ISM prices paid index, which measures inflationary pressures within the factory sector, rose to 67.5 from 63.0 while new orders, a gauge of future growth, edged up to 52.6 from 52.5.
"The ISM was not a bad number," said Shaun Osborne, chief currency strategist with TD Securities in Toronto. "It's close to the boom-bust line. But markets would probably focus on ISM-services given the ongoing crisis in the credit sector," he said. The service sector report is due for release on Wednesday.