WASHINGTON – U.S. factory activity expanded at a slower pace in April, held back by weaker hiring and less company stockpiling. The report is the latest sign that economic growth may be slowing this spring.
The Institute for Supply Management said Wednesday its index of manufacturing activity slipped to 50.7 last month. Thats down from 51.3 in March and the slowest pace this year. A reading above 50 indicates expansion.
A measure of hiring fell sharply to 50.2, the lowest level since November. That suggests factories cut jobs again in April. And manufacturers cut back on stockpiling for the second straight month.
The ISMs employment gauge hasnt been a reliable indicator in recent months: It reached a nine-month high in March, conflicting with government data that reported factories shed 3,000 jobs.
Despite the decline in the pace of growth, economists noted that the survey still shows that manufacturing expanded for the fifth straight month. And there were some positive signs in the report.
A measure of production and new orders rose. More new orders indicate companies may have to rebuild their stockpiles. Order backlogs grew at a faster pace. Higher orders points to more factory output in coming months.
This is not a slump, just more slow growth, said John Silvia, chief economist at Wells Fargo Securities.
Still, slower growth in manufacturing suggests some companies may be worried about across-the-board government spending cuts that began March 1. The survey noted that one company tied to the defense industry mentioned that cuts had weakened its business in April.
The decline follows a report on last week that said businesses slowed their investment in facilities and equipment in the first quarter.
A recession in the 17 European Union countries that use the euro and weaker global growth threaten demand for U.S. exports.