Pace slows in manufacturing, construction

Any reading above 50 indicates growth. 

“This slowdown shows that we cannot take growth in manufacturing for granted,” Scott Paul, executive director of the Alliance for American Manufacturing said in a statement.   

“Our nation urgently needs a jobs and manufacturing strategy, yet it is nowhere on the agenda of this Congress.”

Slower growth in new orders and production are the primary contributors while manufacturing employment continues to show growth for the year, registering 58.2 percent in May compared with 62.7 percent in April. 

New orders came in at 51 percent and order backlogs were 50.5, barely above healthy growth levels. 

Of the 18 manufacturing industries, 14 are reporting growth in May, including transportation equipment and computers. 

“Manufacturers continue to experience significant cost pressures from commodities and other inputs,” the report said. 

Manufacturing has been leading the economic recovery although the sector only about 11 percent of economic activity.

Other negative economic news piled up on Wednesday as employment and construction spending came in below estimates as the economic recovery struggles to accelerate through the second quarter. 

The Dow Jones Industrial average was down more than 2 percent on the slew of negative economic news. 

Companies added 38,000 workers to payrolls, the fewest since September, according to ADP Employer Services.

The median forecast was for an increase in 175,000 private sector jobs.

The Labor Department is set to release its employment report on Friday that could show upward of 200,000 jobs added last month. But following the ADP report, several economists lowered their expectations some down to about 100,000 jobs.

Meanwhile, construction spending was up a modest 0.4 percent in April, the Commerce Department reported. 

The seasonally adjusted annual rate of $765 billion is just 0.5 percent higher than an 11-year low hit in February. 

A healthy level of construction is around $1.5 trillion and it could take several years to reach that amount, economists have said. 

Although energy prices gradually declined last month, the markets were down about 2 percent in May, even with a 1 percent improvement on Tuesday. 

The ISM survey also found that the overall economy grew for the 24th straight month, even as overall growth stalled through the first quarter to 1.8 percent.