This Week's Economic Roundup
Declines in the housing market are putting a damper on business activity in other sectors, sparking fears that the economy is losing momentum toward the end of the year. Here's a look at this week's economic developments and how they may impact your business.
Manufacturing, Service Sectors Slow
The slumping housing market is taking its toll on the manufacturing and service sectors, according to the Institute of Supply Management, a Tempe, Ariz.-based supply-management research group.
Based on a survey of purchasing managers at more than 350 companies nationwide, the group's index of non-manufacturing business fell to 52.9 in September from 57 the previous month, showing that growth is slowing toward the end of the year, the group reported on Wednesday. Results above 50 indicate expansion.
While 10 of 18 service industries surveyed reported growth in September, six others saw declines, including transportation and warehousing, real estate, and construction, the group said.
"Members' comments in September are mixed concerning current business conditions," Anthony Nieves, head of the group's service business survey committee, said in a statement. "The overall economy, interest rates, and security issues are areas of concern."
A similar survey of the U.S. manufacturing sector also showed declines as factories cut jobs and reduced inventory, the group reported on Monday.
As a result, the group's index of manufacturing activity slipped to 52.9 in September from 54.5 the previous month, the report said.
"It's apparent that manufacturing is losing momentum and feeling the effects of higher interest rates and a weaker housing market," Norbert Ore, head of group's manufacturing surveys committee, said in a statement.
New Orders Down
New orders for manufactured goods were also down in August, the second straight month of declines, the Census Bureau reported on Wednesday.
Orders for durable goods in August fell to $210.5 billion and non-durable goods to $193.1 billion, the report said.
Shipments of non-durable goods were down, while shipments and inventories of durable goods were on the rise, the report said.
Sales at retail chain stores were also down last week, slipping by 0.3 percent and slowing year-over-year growth to 3.3 percent, the International Council of Shopping Centers and UBS reported on Tuesday.
Home Sales Rising
Moderate gains in pending home sales, based on contracts signed in August, could be an early sign of stabilization in the housing market, the National Association of Realtors reported on Monday.
Pending home sales rose 4.3 percent in August, though still 14.1 percent below the same period last year, the report said.
"With fewer new listings coming on the market, we should be able to draw down the inventory supply early next year to the point where home prices will rise, but at a slower pace than historic norms," Dave Lereah, the group's chief economist, said in a statement.
Construction spending also rose in August, by 0.3 percent over July to $1.2 billion, the Commerce Department said on Monday.
Gains were registered in both private and public residential construction projects, as well as offices, schools, and hospital, among others, the report said.
Jobless Claims Down
New claims for unemployment benefits fell by 17,000 to 302,000 in the week ending Sept. 30, the Labor Department said on Thursday.
The largest decreases were in Kentucky, North Carolina, and Virginia, the report said.