Slower growth in U.S. manufacturing index

U.S. manufacturing activity expanded in September for the 14th straight month, but at a slower rate than in the previous month, an industry trade group reported Friday.

The Institute for Supply Management said that its manufacturing index reached 54.4 in September, down from 56.3 in August.

That was its lowest level of 2010, slightly below the market's expectation for 54.5. A reading above 50 indicates growth.

Strong growth in the industrial sector has helped lift the U.S. out of the recession.

The report said that companies increased production in September and were willing to hire workers to fill vacant positions.

But it also noted that there have been slower gains in new orders — a gauge of future business — and shrinking company backlogs.

And four out of the five manufacturing categories showed declines, pointing to a broad-based slowdown.

"Manufacturing has been responsible for nearly 20 per cent of [U.S.] private sector employment growth since January 2010," Alistair Bentley, an economist with TD Economics, said in a research note.

"Its substantive decline in September suggests that manufacturing employment will contribute less to job creation in the months ahead."

Bentley said the latest report, in addition to Tuesday's data suggesting a softening in U.S. consumer confidence, "raises the risk of a lacklustre [U.S.] jobs report next Friday."