The US economy has shown signs of decelerating in both its critical manufacturing and services sectors with the release of “disappointing” new data.
The Institute for Supply Management’s index of service activity pointed to slower growth in November, while new orders for factory goods declined in October for the second straight month, the data shows.
The ISM non-manufacturing index fell to 52.0 last month from 52.9 the month before, below economists' forecasts for 53.5, according to a Reuters survey.
New orders for US factory goods fell in October for the second straight month, suggesting a possible softening in the manufacturing sector. That area of the economy has supported the country's recovery from the 2007-2009 recession.
The Commerce Department said on Monday orders for manufactured goods decreased 0.4 percent after a 0.1 per cent drop in September. Economists had forecast orders would fall 0.3 per cent after a previously reported 0.3 per cent increase in September.
The ISM reading stands in contrast to a more upbeat trend in recent data that has showed the US bucking the global downturn. A reading above 50 indicates expansion in the sector.
"This is the first disappointing indicator we've seen in the last couple of weeks," said Cary Leahey, managing director at Decision Economics in New York. "The economy has improved, it is still not growing very quickly."
Ian Shepherdson, chief US economist at High Frequency Economics, said while the headline figure was “a disappointing report” the biggest worry he saw was the low employment index within it.
This sub-index fell to 48.9 from 53.3, and he said this was “consistent with broadly flat private sector payrolls” if sustained.
“We hope this is a rogue number, and it is certainly not consistent with the decline in jobless claims and the rebound in the flow of new online help wanted ads, but we cannot yet be sure,” Shepherdson said.