Ahead Of The Bell: US Manufacturing Survey

WASHINGTON (AP) — U.S. manufacturing activity likely expanded more slowly in June, held back by weak consumer spending and slowing exports.

Economists forecast that the Institute for Supply Management's manufacturing index slipped in June to 52, according to a survey by FactSet. That would be down from 53.5 in May and the lowest reading since October. Readings above 50 indicate expansion.

The private trade group of purchasing managers will release the report at 10 a.m. Eastern on Monday.

Factories have been a key source of jobs and growth since the recession ended almost three years ago. But the sector has shown signs of weakness in recent months.

Manufacturers produced less in May than in April, the Federal Reserve said this month. Automakers cut back on output for the first time in six months. In June, manufacturing activity barely grew in the New York region and contracted sharply in the Philadelphia area, according to surveys by regional Federal Reserve banks. Factory output ticked up in Chicago but only after sliding for three months.

Consumers are less confident in the economy than they have been at any time all year, according to a measure of consumer sentiment released Friday. Worries about slowing job growth are outweighing the benefits of lower gas prices. A separate measure of consumer confidence, issued Tuesday, showed that confidence fell for the fourth straight month.

Hiring has slowed sharply this spring, raising concerns about the pace of the recovery. Employers added an average of only 73,000 jobs per month in April and May. That's much lower than the average of 226,000 added in the first three months of this year. The unemployment rate rose in May to 8.2 percent from 8.1 percent, the first increase in a year.

Slower job growth and falling confidence is weighing on consumers' willingness to spend. Americans cut back on purchases of autos and other long-lasting factory goods in May, the government said Friday.

U.S. exports of manufactured goods have also suffered as Europe's financial crisis has cut into demand in that region. And slowing growth in China, India and other emerging markets means that companies in Asia and Latin America are buying fewer American-made cranes, trucks and other heavy equipment.

There have been a few good signs recently.

U.S. factories received more orders for long-lasting manufactured goods in May, while a key measure of business investment plans rose.