Business activity in the U.S. cooled in January as orders and employment slowed, indicating last quarter’s pickup in growth will not be sustained into 2012.
The Institute for Supply Management-Chicago Inc. said today its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth. Economists forecast the gauge would rise to 63, according to the median of 57 estimates in a Bloomberg survey.
Three consecutive readings exceeding 60 are still the strongest since early 2011, signaling manufacturing remains a mainstay of the expansion even as the world’s largest economy decelerates. Nonetheless, the risk of a recession in Europe prompted by its debt crisis and slower growth in some emerging markets pose a risk to export growth.
“We’re still getting off to a healthy start, benefiting from moderate growth in U.S. demand,” Richard DeKaser, deputy chief economist at Parthenon Group in Boston, said before the report, who projected the index would drop to 59. “The urgency to rebuild inventories has faded even as demand is still solid.”
Economists’ projections in the Bloomberg survey ranged from 59 to 67.
Another report today showed residential real estate prices fell more than forecast in November, showing distressed properties are hampering improvement in the housing market.
The S&P/Case-Shiller index of property values in 20 cities declined 3.7 percent from November 2010 after decreasing 3.4 percent in the year ended in October, the group said today in New York. Economists projected a 3.3 percent drop, according to the median estimate in a Bloomberg survey.
© Copyright 2012 Bloomberg News. All rights reserved.