A measure of U.S. factory activity fell more than expected in November as a gauge of employment cooled, but the index continued to point to strengthening manufacturing conditions.
The Institute for Supply Management (ISM) on Friday said its index of national factory activity slipped to a reading of 58.2 last month from 58.7 in October.
Even with the decline, the index pointed to growth ahead and was only marginally below a September reading that was the highest since May 2004. But the ISM’s employment index slipped unexpectedly to 59.7 from 59.8, which could point to less strength in manufacturing hiring this month than analysts had expected.
“(The ISM reading is) consistent with robust growth in output, exports, capital spending and employment,” said Ian Shepherdson, an economist at Pantheon Macroeconomics.
U.S. Treasuries yields edged down from session highs after the data, while the dollar and stocks were trading slightly higher.
Even with cooler growth in factory activity, strength in the sector as well as in the broader labor market appear likely keep the Federal Reserve on track to increase interest rates later this month.
A reading above 50 in the ISM index indicates growth in manufacturing, which accounts for about 12 percent of the U.S. economy. Economists polled by Reuters had expected the index to slip to 58.4 last month, edging lower from a surge posted after hurricanes disrupted supply chains earlier in the year.
The ISM’s new orders index rose to 64 in November from 63.4 a month earlier.
Other data on Friday showed U.S. construction spending rising more quickly than expected in October as public construction outlays surged and investment in private projects increased for the first time in four months. The Commerce Department said that construction spending increased 1.4 percent to a record high $1.24 trillion, the swiftest advance in five months.
Economists polled by Reuters had forecast construction spending to increase 0.5 percent. Construction spending increased 2.9 percent on a year-on-year basis.
Outlays on public construction projects jumped 3.9 percent, the largest gain since 2014. Spending on state and local government construction projects climbed 3.3 percent. Federal government construction spending soared 11.1 percent.
Construction spending outlays were revised higher for both August and September, which could affect the government’s estimate for third-quarter gross domestic product growth. On Wednesday, the government said in its second estimate of the economy’s July-September performance that GDP advanced 3.3 percent. Investment in both residential and non-residential structures subtracted from GDP in the quarter.