ISM Says Manufacturing Growth Slows In January

ByJohn S. McClenahen The manufacturing sector of the U.S. economy continued to grow last month, although at a slower pace than in December 2002, says the Institute for Supply Management (ISM), Tempe, Ariz. The group's manufacturing index was 53.9% in January, some 1.3 percentage points below the 55.2% posted in the final month of 2002. January was the third consecutive month that the index has shown manufacturing activity increasing. A figure above 50% on the index indicates that manufacturing generally is expanding; a mark below 50% signals that manufacturing is contracting. "Overall, the signs are still positive for the first quarter" of 2003, asserts Norbert J. Ore, the chairperson of ISM's manufacturing business survey committee and group director of strategic sourcing and procurement for Georgia-Pacific Corp. Numbers for both new orders and production, two of the 10 elements included in the overall manufacturing index, remained well above 50% in January, although they also were not as strong as they had been in December. ISM's new orders index was 59.7% in January, down 3.2 percentage points from the 62.9% registered in December. The production index was 56.3% in January, down a third of a percentage point from December's 56.6%. "Comments from purchasing and supply executives offered some expressions of optimism while still expressing concerns about possible war," ISM notes. "Adding to the list of concerns, energy prices are a major factor as oil and natural gas prices are skyrocketing." Meanwhile, the U.S. Commerce Department reports that the value of construction put in place across the U.S. was at a seasonally adjusted annual rate of $858.3 billion in December 2002, 1.2% higher than November's revised mark of $847.9 billion. The value of construction put in place for the full year 2002 was $846.2 billion, 0.4% higher than the $842.5 billion posted in 2001.