US Economy

ISM manufacturing index hits 48.2 in Dec.; Construction spending down 0.4% in Nov.

Workers assemble Jeep Wranglers at the Chrysler Toledo North Assembly Plant in Toledo, Ohio.
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The U.S. economy's manufacturing sector contracted further in December, according to an industry report released on Monday. The Institute for Supply Management (ISM) said its index of national factory activity fell to 48.2 from 48.6 the month before. The reading was just below expectations of 49 from a Reuters poll of 80 economists.

A reading above 50 indicates expansion in the manufacturing sector and a reading below 50 indicates contraction.

The employment index fell to 48.1 from 51.3 a month earlier. Expectations called for a reading of 50.

New orders climbed to 49.2 from 48.9. The prices paid index fell to 33.5 from 35.5, compared to expectations of 35.0.

Construction spending posts first decline in nearly 1-1/2 years

Meanwhile, construction spending fell for the first time in nearly 1-1/2 years in November as a drop in nonresidential investment offset an increase in housing outlays, pointing to moderate economic growth in the fourth quarter.

Construction spending slipped 0.4 percent, the first and also biggest drop since June 2014, after a downwardly revised 0.3 percent gain in October, the Commerce Department said on Monday.

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The government revised construction data from January 2005 through October 2015 because of a "processing error in the tabulation of data." The revisions, which showed construction spending was not as strong as previously reported for much of 2015, could prompt economists to lower their fourth-quarter gross domestic product estimates.

Growth estimates are currently hovering below a 2 percent annual pace. The economy expanded at a 2 percent rate in the third quarter. Economists polled by Reuters had forecast construction spending rising 0.6 percent in November after a previously reported 1.0 percent increase in October.

Construction outlays were up 10.5 percent compared to November of last year. Construction spending in November was held down by a 0.8 percent drop in nonresidential construction. Outlays on residential construction rose 0.2 percent.

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Private construction spending slipped 0.2 percent, but spending on private residential construction rose 0.3 percent.

Public construction outlays declined 1.0 percent. Spending on state and local government construction projects, which is the largest portion of the public sector segment, slipped 0.4 percent. Federal government outlays tumbled 7.2 percent.