The manufacturing sector of the U.S. shrank in November and employment weakened, according to new data on Monday. The Institute of Supply Management’s purchasing managers’ index fell unexpectedly to 49.5 during November from October’s 51.7. A reading that is under 50 indicates shrinkage and over 50 expansion.
Economists had expected a fall in the PMI but only to 51. The group said the second six months of 2012 continued to slowdown in demand and part of that is due to worries over what will happen regarding the fiscal cliff.
The latest PMI has returned to shrinkage numbers that were also seen during the summer. The latest report contradicts another national factory index. Early Monday, Markit, a data provider, said its factory index for the U.S. had reached a high of six months during November.
Manufacturers reported a small easing in their cost pressure as the ISM prices index dropped from 55 to 52.5 in October. In a separate issue, U.S. spending on construction projects increased during October to a three year high as new home and apartment building was up.
Spending on construction was up 1.4% from the previous month to an adjusted seasonal annual rate of $872 billion. That was the biggest gain since September of 2009 and was the sixth straight month with an increase.
Construction on private residences was up 0.3% to over $294 billion and was the highest it has been since November of 2008 and nearly 21% higher than one year ago. Building of multifamily units was up 6.2% from the previous month, while single family homes increased by 3.6%.
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