Manufacturing and Construction Spending Fail to Meet Expectations
It's good to see the Bush economic plan is doing wonders for the manufacturing and construction sectors. With the expected tax cut factored in to the assumptions of many businesses for the remainder of the year, both the Chicago Institute of Supply Management factory production and government construction spending indices came up short of expectations this morning.
U.S. stocks fell on Tuesday at midmorning after two reports found that the manufacturing sector remained weak and construction spending unexpectedly posted its biggest drop in a year, disappointing investors and renewing doubts about the strength of the U.S. economy.
The Institute for Supply Management's national factory gauge edged up to 49.8 in June from 49.4 in May. That was well short of Wall Street forecasts, which had pegged the figure at 51.0. A number above 50 signals growth while a figure below that level points to contraction.
Separately, the government said U.S. construction spending fell an unexpected 1.7 percent in May, matching its drop in May 2002. Construction outlays fell to a seasonally adjusted $869.8 billion in May, versus expectations of a slight increase.
"There's a combination of concerns over earnings ... and the economic news coming out was not as strong as expected. People are hoping to see some signs of a recovery, but we've yet to see one on the corporate side," said Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank Private Banking.
But Iím sure those dividend tax cuts will do the trick, right?