Manufacturing shrinks at fastest pace in 5 years; Construction falls most since 1994

[marmar]

from Bloomberg:



U.S. Economy: Manufacturing, Construction Spending Decline

By Bob Willis

March 3 (Bloomberg) -- Manufacturing in the U.S. shrank at the fastest pace in almost five years and construction spending fell the most since 1994 as the economy moved closer to a recession.

The Institute for Supply Management's factory index dropped to 48.3 in February from 50.7 the previous month, the Tempe, Arizona-based group said today. Fifty is the dividing line between contraction and expansion. At the same time, the Commerce Department reported that spending on building projects slumped 1.7 percent in January, more than anticipated.

The collapse in housing is rippling through the economy as consumers pare spending and factories cut production of cars, furniture and appliances. Traders are betting the Federal Reserve will be forced to reduce its benchmark interest rate by 0.75 percentage point at its March 18 meeting.

``The evidence is piling up that the economy is slipping into at least a mild recession,'' said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis, who forecast the index would drop to 48. ``With the much higher food and energy prices and restricted credit, there are not a lot of avenues for consumers to continue to spend.''

Economists surveyed by Bloomberg News forecast the index would fall to 48, according to the median estimate. Spending on construction was projected to decline 0.7 percent. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=agp_O0RLVx54&refer=home