US manufacturing slows as construction spending slides

A mechanic works on a jet engine at General Electric's GE Aviation factory in Cincinnati.
Luke Sharrett | Bloomberg | Getty Images

U.S. manufacturing expanded during September but the pace of growth at American factories slowed from August, which was the best monthly showing since March 2011, according to an industry report released on Wednesday.

The Institute for Supply Management (ISM) said its index of national factory activity eased to 56.6 in September from 59.0 in August. The reading fell short of expectations of 58.5, according to a Reuters poll of economists.

A reading above 50 indicates expansion in the manufacturing sector.

The employment gauge slipped in September to 54.6 from 58.1 in August, below expectations for a reading of 57.5. The new orders index dropped to 60.0 from 66.7. The gauge of prices paid rose to 59.5 from 58.0, beating forecasts of 57.0 in the Reuters poll.

Sept. ISM manufacturing 56.6
Sept. ISM manufacturing 56.6

Separately, data showed U.S. construction spending fell in August, the second decline in the past three months, with housing, non-residential and government projects all showing weakness.

The Commerce Department says construction spending dropped a seasonally adjusted 0.8 percent after a 1.2 percent increase in July. The July increase followed a 1.6 percent June decline.

The weakness was apparent in all sectors. Housing construction declined 0.1 percent, reflecting a big drop in spending on remodeling. Non-residential construction fell 1.4 percent while spending on government projects dropped 0.9 percent.

In addition to the August decline, the government revised lower its estimates for activity in the previous two months. This could call into question expectations that building activity will support economic growth in the second half of the year.

--By Reuters and The Associated Press