A gauge of U.S. factory activity slid from a near three-year high in July amid a slowdown in new orders and consumer spending barely rose in the prior month, setting the stage for a moderate economic expansion in the third quarter.
The growth outlook was further dimmed by other reports on Tuesday showing sharply lower U.S. motor vehicle sales in July and a plunge in construction spending in June, which could lead the government to cut its second-quarter GDP growth estimate.
The Commerce Department reported last week that the economy grew at a 2.6 percent annual rate in the April-June period, accelerating from the first-quarter’s tepid 1.2 percent pace.
“If the consumer has any say, don’t expect any major improvement in growth,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Yes, manufacturers are saying things are good, but with vehicle sales trending downward compared to last year, it is likely there is little room for further improvement.”