Slowing Factory Growth Indicates Fed Will Likely Continue to Freeze Rates

Includes: IYJ, IYM, SPY, VAW, VIS, XLI
by: Jonathan Liss

Excerpt from our One-Page WSJ Summary:

Data on Factories Indicate Economy Is Losing Speed

Summary: There are indications that manufacturing growth is slowing. The Institute for Supply Management, a private group of corporate purchasing managers, said its manufacturing index (pictured -- click to enlarge) fell to 52.9 last month from 54.5 in August. Although readings above 50 indicate expansion, the September measure suggests that factories experienced slightly weaker growth as the third quarter progressed. Recent data on industrial production and factory orders have also pointed to slower growth -- largely the result of a weak housing market and high interest rates. Slower economic growth is likely to damp inflationary pressures, and makes it more probable that the Federal Reserve will leave interest rates frozen or even cut them. Despite the slower growth rate, September was the 40th consecutive month of expansion in the manufacturing sector - the longest uninterrupted growth streak since the 1970s.
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