Manufacturing in Chicago Area Contracted in April, ISM Says
anufacturing in the Chicago area contracted in April, the Institute for Supply Management said Wednesday, while Federal Reserve Chairman Alan Greenspan said he remained confident the U.S. economy would begin to expand at a faster pace.
ISM's factory index fell to 47.6 in April from 48.4 in March as new orders and employment retreated. Readings below 50 indicates contraction. Analysts were expecting a reading of 48.9, Bloomberg reported.
The manufacturing sector is one of the largest and most important customers of the trucking industry. A contraction could mean fewer shipments in the coming months.
The Fed chairman said that if the economy needed a further boost, the central bank would be prepared to deliver more stimulus by cutting interest rates. The Fed next meets May 6.
Greenspan also noted that while he favored much of President Bush’s plan to cut taxes, he cautioned those cuts would need to be offset either with cuts in government spending or tax increases in other areas to keep the deficit from soaring, the Associated Press reported.
Meanwhile, April marked the second straight month the Chicago index showed contraction. ISM said the data sug-gested the economy had not yet recovered from the Iraq war. Prior to the war, Chicago-area factories expanded for more than a year.
The index of new orders dropped to 44.6 from 52.5 in March, while a gauge of production rose to 51 from 49.1. ISM had reported the biggest decline in 23 years last month and showed the first drop production since December 2001.
The employment index fell to 43.7 from 45.1 in March.
ISM’s national manufacturing index is scheduled to be released on Thursday.
