Growth in the manufacturing sector slowed in August while construction spending dropped sharply in July, indicating turmoil in the housing and financial markets could be spilling over to the broader economy.
One bright spot for the U.S. economy, however, has been the manufacturing sector’s exports, whose growth accelerated last month, but analysts are unsure whether that will be enough to offset housing-related woes that have hurt consumer sentiment.
The Commerce Department, meanwhile, said Tuesday that construction spending dropped 0.4 percent in July, compared with June, the weakest showing since a 0.6 percent fall in January.
It was a bigger drop than economists had been expecting and underscored the continued drag the severe slump in housing is having on building activity.
There were several positive signs for the economy in the ISM survey. The production, employment and export indices increased, while new orders declined but remained above 50.
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