The U.S. economy is cooling after a surge in the third quarter, according to the latest reports on manufacturing and consumer spending that back the Federal Reserve's move yesterday to cut interest rates.
The Institute for Supply Management's factory index fell to 50.9 in October, the lowest in seven months, from 52 in September and less than economists anticipated. Americans increased spending 0.3 percent in September, the Commerce Department said today in Washington, also less than forecast.
``The reports we saw today are generally consistent with a slowing economy,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, who accurately predicted the spending gain. ``Consumer spending left the third quarter without a huge amount of momentum.''
The housing recession, now in its third year, is eroding demand for construction equipment, furniture and appliances, economists said. Overseas growth and a weaker dollar are boosting exports at firms including DuPont Co. and Agco Corp., helping avert a broader downturn.
Readings above 50 in the Tempe, Arizona-based ISM's index signal expansion. New orders and production cooled, while a measure of prices paid by manufacturers rose. Export orders climbed.
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