U.S. ISM Factory Index Declines More Than Forecast

Feb 05, 2014

 

 

 

 

 

 

 

 

 

 

 

 

Factories expanded in January at the weakest pace in eight months as colder-than-usual winter weather slowed demand and production, bringing a halt to recent momentum in U.S. manufacturing.

The Institute for Supply Management’s factory index decreased to 51.3, lower than the most pessimistic forecast in a Bloomberg survey of economists, from 56.5 the prior month, the Tempe, Arizona-based group’s report showed today. Readings greater than 50 indicate growth, and the median estimate was 56.

Stocks plunged after the figures showed a measure of orders declined by the most since December 1980 as a number of companies said adverse weather slowed business. General Motors Co. and Ford Motor Co. said today that fewer Americans ventured out to motor-vehicle dealerships during the coldest January in two decades.

“The exceptionally cold weather and the harsh snow storms -- we all move a little bit slower in those periods and the economy is no different,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. Price is the top-ranked forecaster of the ISM index over the past two years, according to data compiled by Bloomberg. Still, “it should be some testament to the economy’s fundamental underpinnings that it was able to expand during such conditions.”

Stocks fell, sending benchmark indexes to their biggest declines since June, after the report. The Standard & Poor’s 500 Index dropped 2.3 percent to 1,741.89 at the close in New York.

For more: BLOOMBERG