Order dip hits US factory growth

Business Materials 2 October 2007 00:40 (UTC +04:00)

( BBC ) - US manufacturing growth slowed in September as production and new orders decelerated, official figures show.

The Institute for Supply Management index of national factory activity fell to 52.0 from 52.9 in August.

While a figure above 50 still indicates expansion, the index did offer further proof of a slowdown in the US economy.

Signs of a slowdown have raised hopes of a US interest rates cut - weakening the dollar which has fallen to record lows against the euro in recent days.

On Monday, the euro settled at $1.423, after rising as high as $1.4283 earlier in the day.

The dollar has been sliding since the Federal Reserve cut rates from 5.25% to 4.75% in September to help rejuvenate confidence in the world's largest economy.

Currency traders are now looking ahead to jobless data out on Friday for a better idea of how the housing slump and credit woes are hurting the economy.

Depressed numbers could strengthen the Fed's hand in cutting rates further.

However, analysts added that the latest manufacturing figures were unlikely to have a big effect, despite them being softer than expected.

"Manufacturing growth... seems to have slowed down in the third quarter, but it's still moderately positive," said 4Cast economist David Sloan.