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Construction, Purchasing Mark Continued Slowing of Economy

By John M. Berry
The Washington Post

Manufacturing industries expanded only modestly last month for the second month in a row, the National Association of Purchasing Management reported Monday, indicating that the slowing of U.S. economic growth has continued into the spring.

The NAPM said that its index covering the manufacturing sector of the economy rose slightly to 52 percent last month from 51.4 percent in March, but both figures were well below last year's November peak of 59.9 percent. A reading of 50 percent or more indicates manufacturing activity is expanding.

"For the second consecutive month, the number of purchasing executives who commented that business activity was stronger in April was equal to those who indicated that business was weaker," said Ralph G. Kauffman, chairman of the NAPM's Business Survey Committee.

Meanwhile, two government reports for March also pointed to slower growth, analysts said.

In one, the Commerce Department said that the value of new construction put in place in March was estimated at an annual rate of $525.1 billion, down from $527.2 billion in February.

Both private and public construction declined in March, with a drop in new home building responsible for the decline in private construction. With last year's rise in home mortgage rates reducing demand, spending on new home construction was at a $146.2 billion rate last month, substantially below February's $153.1 billion rate.

On the other hand, nonresidential private building continued to increase, but less than in other recent months. Spending in that area reached a $111.5 billion rate in March, up one percent from February and 18 percent higher than in March 1994.

In the second report, Commerce said that personal income rose 0.6 percent in March compared with 0.5 percent in February. However, private industry wage and salary payments rose only 0.2 percent, the smallest gain in four months.

The department also said that consumer spending increased in March by 0.4 percent, after adjustment for inflation, after falling at that rate in February. With the gains in December and January only 0.1 percent and 0.2 percent, respectively, U.S. households bought goods and services in March at only a slightly higher rate than they did back in November.

Since after-tax incomes have been rising recently more rapidly than spending, the nation's personal saving rate has increased. Saving in the first three months of this year was equal to 5.2 percent of disposable personal income, up from 4.6 percent in the October-December period and 4.1 percent for all of last year.