Underwhelming Economic Reports Pull Markets Lower
Manufacturing continued to expand in April, albeit at a slower pace than in March, according to the April 2013 Manufacturing ISM Report on Business. According to the Institute for Supply Management, the PMI registered 50.7 percent, a 0.6 percentage point drop from March’s reading of 51.3 percent.
April’s PMI is a disappointment to investors looking for an excuse to bid up the S&P 500. Economists were expecting manufacturing activity to fall just 0.3 percentage points to 51.0 percent. The ISM report supports data released by Markit earlier in the morning that showed that the rate of manufacturing growth in the U.S. slowed to a six-month low. Both reports suggest that while manufacturing continues to grow, it is doing so at a slower rate now than in the first few months of the year.
A separate report released on Wednesday by the Census Bureau showed that construction outlays unexpectedly fell 1.7 percent on the month. Economists were expecting a sequential increase of 0.6 percent. Total spending is still up 4.8 percent on the year. April’s relative weakness was led by a 4.1 percent decline in public outlays. At a glance, it looks like overall construction spending is slowing down with the exception of the housing market.
All of this underwhelming data pushed markets lower in morning trading on Wednesday.