Manufacturing slows in US and Europe

US manufacturing slowed in September but consumer spending appears to be have held up relatively well. Bloomberg reports:

U.S. manufacturing expanded at a slower pace, while consumer spending increased, underlining the Federal Reserve’s forecast for a “modest” pace of economic growth in coming months.

The Institute for Supply Management’s factory index dropped to 54.4 in September from 56.3 the prior month, the Tempe, Arizona-based group said today. Readings greater than 50 signal growth. Consumer purchases increased 0.4 percent in August for a second month, more than forecast by economists...

The gain in personal spending exceeded the 0.3 percent increase projected by the median forecast of economists surveyed by Bloomberg News. Incomes were up 0.5 percent, the biggest advance this year, propelled by the resumption of extended and emergency unemployment benefits.

A 0.2 percent increase in inflation-adjusted spending was driven by a 0.8 percent rise in nondurable goods such as food and clothing. The gain was the biggest since February. The figures bolster the view that the extended benefits may have helped unemployed Americans make ends meet...

Construction outlays rose 0.4 percent in August as an increase in government stimulus spending for public works overcame a drop in homebuilding, according to figures from the Commerce Department.

The Thomson Reuters/University of Michigan final index of consumer sentiment fell to 68.2 in September from 68.9 the previous month. The gauge was projected to decline to 67, according to the median forecast in a Bloomberg survey, and compares with a preliminary reading of 66.6 issued last month.

Manufacturing also cooled in the euro area in September. Bloomber reports:

Growth in Europe’s manufacturing industry slowed and unemployment held at a 12-year high as a cooling global recovery restrained demand.

A gauge of manufacturing in the 16-nation euro region declined to 53.7 in September from 55.1 the previous month, London-based Markit Economics said today. A separate report showed that the region’s jobless rate stayed at 10.1 percent in August, the highest since June 1998.

It was a similar story for UK manufacturing. Reuters reports:

Activity in Britain's manufacturing sector slowed to a 10-month low in September after export orders fell for the first time in a year, a survey showed on Friday, suggesting growth may have peaked.

The Markit/Chartered Institute of Purchasing and Supply manufacturing PMI index fell to 53.4 in September from a downwardly revised 53.7 in August. That was the lowest since November 2009 and below forecasts for a reading of 53.8.

But China provided additional evidence on Friday that its manufacturing sector accelerated in September. From Bloomberg:

China’s manufacturing expanded at the fastest pace in four months in September, adding to signs that economic growth is stabilizing even as the government curbs energy use and tries to cool the property market.

The purchasing managers’ index rose to 53.8 from 51.7 in August, China’s logistics federation and statistics bureau said in an e-mail. The median forecast of 15 economists surveyed by Bloomberg News was 52.5, with none forecasting such a large gain. Readings above 50 indicate expansions.