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NAPM index up, but slowly
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May 3, 1999: 12:17 p.m. ET
Key indicator slows pace while construction posts surprising gain
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NEW YORK (CNNfn) - The U.S. manufacturing sector slowed its pace but still managed a third consecutive month of expansion in April, headlining several positive economic reports Monday that helped appease inflation-leery investors.
The National Association of Purchasing Management (NAPM) said Monday that its monthly purchasing index for the manufacturing sector closed April at 52.9 percent, below both the 56 percent analysts expected and the 54.8 percent posted last year.
Meanwhile, the U.S. Department of Commerce reported U.S. construction spending soared 0.5 percent to $708.1 billion in March, well above the 0.5 percent decline that was projected. That followed a revised 2 percent increase in February.
Both the Dow industrial average and the 30-year bond responded positively to the news. The Dow was up 88.77 to 10,877.81 just before noon while the 30-year bond reversed a morning decline to trade down 1/32 to 94-4/32.
Manufacturing extends growth spurt
The NAPM index was the day's most anticipated release, particularly after the Chicago NAPM index climbed well above projections on Friday, sparking new inflation fears and sending the bond market into a tailspin.
But by closing lower than expected while still indicating an industry expansion -- defined as a reading above 50 percent -- economists said NAPM managed to quell inflation fears.
"It means manufacturing is expanding sluggishly and that's probably about what we want," Richard Rippe, chief economist with Prudential Securities told CNNfn.
NAPM's production index declined to 53.4 percent in April from 57.6 percent in March while its new orders index fell from 57.3 percent in March to 56.8 percent in April.
Backlog orders registered at 52.5 percent, higher than the 51.5 percent posted in March while prices continued their decline, falling from 44.4 percent in March to 41.2 percent
NAPM Chairman Norbert J. Ore said the although the industry's growth was slower than projected, the manufacturing sector should continue to grow.
"New orders are growing and as a leading indicator, predicts growth in production rates in the coming months," Ore said in a written statement. "Production is still strong while supplies and deliveries of commodities do not appear to be a problem."
NAPM said half of the 20 industries in the manufacturing sector --including the petroleum, chemicals, printing and publishing, food and paper sectors -- experienced growth.
Construction beats estimates
The March construction report showed both private and public sector construction posted record totals in March. Private spending rose 0.6 percent to $549.5 billion while public spending climbed 0.3 percent to $158.5 billion.
The private sector gain was bolstered by a 1.9 percent increase in the building of new homes while public sector spending grew predominately on the strength of streets, sewer systems and water supply facility construction.
The Commerce Department also reported Monday that personal income and consumer spending also rose 0.4 percent during March, while personal saving dropped 0.6 percent.
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