By Bob Willis and Shobhana Chandra
May 1 (Bloomberg) — Manufacturing in the U.S. shrank for a third month and rising prices eroded consumers’ buying power as the six-year economic expansion ground to a halt.
The factory index compiled by the Tempe, Arizona-based Institute for Supply Management was unchanged at 48.6 in April. The Commerce Department said consumer spending rose 0.4 percent in March. Stripping out the effect of inflation, purchases were up 0.1 percent after stagnating the previous month.
The ISM report indicated no sign of improvement from the first quarter, when only a jump in inventories prevented the economy from shrinking. Consumers and manufacturers are struggling with rising prices and the worst housing slump in a quarter century. Home Depot Inc., the world’s biggest home- improvement retailer, today scaled back expansion plans and said it will fire workers as its sales and earnings deteriorate.
“The economy is still in a mode where it’s declining,” Brian Bethune, director of financial economics at Global Insight Inc. in Lexington, Massachusetts, said in an interview with Bloomberg Radio. “These numbers certainly reflect that. We’re going to see weaker jobs numbers and we’re going to see consumption bump along at a very slow rate.” (more…)
