Manufacturing Slows

By Don Hogsett -- Home Textiles Today, 2/7/2005 12:00:00 AM

Tempe, Ariz — —

Tempe, Ariz —Cooling down modestly from its pace of the past several months, the U.S. manufacturing sector continued to grow, but at a somewhat slower pace than during December, and missing a Wall Street target.

In a widely watched report on manufacturing activity, the nation's purchasing managers said their monthly gauge of manufacturing activity slipped by 0.9 percent to a level of 56.4, down from 57.3 in December. Wall Street analysts had been expecting a smaller dip, to a level of 57.

Acting as a drag on the January index was a steep 6.1 percent drop in new orders, along with a 3.5 percent decline in order backlogs and a 2.2 percent dip in export orders.

On the upside, employment in the manufacturing sector grew 4.8 percent, a 15th straight increase following a 37-month trend of contraction, the Institute for Supply Management reported. Production accelerated as well, rising 1.1 percent.

The crucial Prices Index declined 3 percentage points to a level of 69, down from 72 the prior month. “Prices, particularly energy prices, continue to provide a challenge to buyers,” said Norbert Ore, chairman of the ISM's Manufacturing Business Survey Committee. “However, the rate of increase of prices continues to decelerate, raising hopes that price inflation will moderate as the year advances.” Textiles was among the 17 industries reporting higher prices for supplies during January.

“January sets the tone for a strong first quarter,” said Ore. Even though the overall index is slightly lower, “The month-over-month growth is still quite strong and will provide significant momentum for the remainder of the first quarter.”

JANUARY SNAPSHOT
Manufacturing benchmarks
Month-over-month percentage-point change