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By Courtney Schlisserman
Dec. 3 (Bloomberg) -- Manufacturing in the U.S. probably grew in November at the slowest pace in 10 months as the housing slump spread, economists said before a report today.
The Institute for Supply Management's manufacturing index fell to 50.7 from 50.9 in October, according to the median forecast of economists surveyed by Bloomberg News. A reading of 50 is the dividing line between contraction and expansion.
Export gains by themselves won't be enough to shield factories from the emerging slowdown in consumer spending and business investment, economists said. Credit restrictions have also limited access to financing and may lead to further declines in orders and production.
``If businesses don't have that extra funding, they're going to put off discretionary spending,'' said Russell Price, senior economist at H&R Block Financial Advisors in Detroit. ``Until now, the manufacturing sector really has been able to withstand the slowdown in housing.''
The Tempe, Arizona-based Institute for Supply Management is scheduled to issue its report at 10 a.m. Washington time. The 64 forecasts ranged from 48 to 52.1.
Economists also forecast the index of prices paid for raw materials rose to 65.5 from 63. Petroleum prices reached a record $99.29 a barrel on Nov. 21 in New York and other commodity costs also increased.
Rohm & Haas Co. said Nov. 27 that increases in its prices will only help the company, the world's largest maker of acrylic paint ingredients, recoup about 80 percent of its increase in raw-material costs.
Exports Help
Demand for electronics materials and chemicals from outside the U.S. will help offset some of the slowing in U.S. demand for paints and other construction products, Chief Executive Officer Raj L. Gupta said in a statement.
Economists lowered fourth-quarter growth forecast after reports last month showed inventories grew more last quarter than previously estimated, while consumer spending slowed in October and orders for durable good dropped.
Economists at Lehman Brothers Holdings Inc. in New York project the economy will expand at a 0.8 percent annual rate from October through December, down from a 4.9 percent pace in the previous three months. The data currently available suggest growth may be as weak as 0.2 percent, Morgan Stanley said.
The third quarter's rate of expansion was the fastest in four years.
The ISM report is projected to run counter to regional surveys that showed manufacturing gained strength. Measures from the National Association of Purchasing Management-Chicago and the Federal Reserve Bank of Philadelphia rose, while the New York Fed's gauge held near a three-year high.
``Manufacturing activity was mixed across subsectors but appeared to be largely stable,'' the Fed said Nov. 28 in its regional business survey, known as the Beige Book. The report also said the economy expanded at a ``reduced pace'' during the survey period of October through mid-November.
Bloomberg Survey
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ISM ISM
Manu Prices
Index Index
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Date of Release 12/03 12/03
Observation Period Nov. Nov.
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Median 50.7 65.5
Average 50.6 65.7
High Forecast 52.1 68.0
Low Forecast 48.0 62.0
Number of Participants 64 14
Previous 50.9 63.0
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4CAST Ltd. 51.0 ---
Action Economics 51.0 68.0
Aletti Gestielle SGR 49.7 66.0
Allianz Dresdner Economic 50.7 ---
Argus Research Corp. 51.0 ---
Banc of America Securities 49.8 ---
Bank of Tokyo- Mitsubishi UFJ 51.3 ---
Bantleon Bank AG 50.4 ---
Barclays Capital 50.2 ---
BBVA 51.0 ---
BMO Capital Markets 50.5 65.0
BNP Paribas 50.5 ---
Briefing.com 51.5 ---
Calyon 52.0 ---
CIBC World Markets 50.0 ---
Citi 52.0 68.0
ClearView Economics 51.0 ---
Commerzbank AG 50.0 ---
Credit Suisse 50.5 66.0
Daiwa Securities America 51.0 68.0
Danske Bank 51.0 ---
DekaBank 51.0 ---
Desjardins Group 50.2 ---
Deutsche Bank Securities 50.5 ---
Deutsche Postbank AG 50.8 ---
Dresdner Kleinwort 50.5 66.0
DZ Bank 49.8 ---
First Trust Advisors 50.0 ---
Fortis 51.0 ---
H&R Block Financial Advisors 50.0 64.0
Helaba 52.0 ---
HSBC Markets 48.0 65.0
IDEAglobal 50.5 65.0
Informa Global Markets 50.5 ---
ING Financial Markets 51.0 ---
Insight Economics 51.0 ---
Intesa-SanPaulo 50.5 ---
J.P. Morgan Chase 51.0 ---
JPMorgan Private Client 51.0 ---
Landesbank Berlin 51.0 ---
Landesbank BW 50.5 ---
Lehman Brothers 51.5 65.0
Lloyds TSB 51.3 65.0
Maria Fiorini Ramirez Inc. 50.0 ---
Merrill Lynch 50.2 ---
Moody's Economy.com 51.5 ---
Morgan Stanley & Co. 50.5 ---
National City Bank 52.1 66.1
Nomura Securities Intl. 49.5 62.0
PNC Bank 50.0 ---
RBS Greenwich Capital 50.5 ---
Ried, Thunberg & Co. 51.0 ---
Scotia Capital 50.0 ---
Societe Generale 51.4 ---
Standard Chartered 50.8 ---
Stone & McCarthy Research 48.8 ---
Thomson Financial/IFR 50.1 ---
Unicredit MIB 49.5 ---
University of Maryland 50.7 ---
Wachovia Corp. 50.6 ---
Wells Fargo & Co. 51.0 ---
WestLB AG 50.2 ---
Westpac Banking Co. 51.0 ---
Wrightson Associates 51.0 ---
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To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net.
Last Updated: December 3, 2007 00:12 EST
