More Signs of Slowing Growth

Factory activity in August slowed slightly, and big drops in construction spending and pending home sales in July offered the latest evidence of the faltering U.S. housing market, according to reports released Friday.

But consumer sentiment held up better in August than many economists had expected, and analysts said the economy appeared to be decelerating, though not abruptly.

“It looks an awful lot like a soft landing, at least for now,” said Dana Johnson, chief economist at Comerica Bank in Detroit.

The deluge of data, along with a Labor Department report showing a net addition of 128,000 jobs in August, left analysts and investors comfortable with bets that the Federal Reserve had finished raising interest rates and would turn to cut them next year.

The Institute for Supply Management said its index of factory activity slipped to 54.5 in August from 54.7 in July, showing continued growth at a slightly slower pace.

At the same time, the prices-paid index fell to 73 from 78.5, a sign of receding price pressures.

The University of Michigan’s sentiment index fell less than expected in August, to 82 from 84.7 in July.

Two other reports combined to underscore the sharp weakening that has been evident in the U.S. housing market.

The Commerce Department said construction spending tumbled 1.2% in July, the biggest drop since August 2001, as spending on home building plummeted 2%.

Also, the National Assn. of Realtors said its index of pending homes sales -- a gauge of contracted sales waiting to close -- fell 7% in July to the lowest level in more than three years.

The job report, however, showed construction payrolls expanded by 17,000 in August, with residential construction employment up marginally for a second straight month.