Unusually cold winter weather is being blamed for U.S. manufacturing expansion slowing to its weakest pace since last summer. The Institute for Supply Management's manufacturing index decreased to 51.3, falling from 56.5 the prior month. Readings greater than 50 indicate growth.
Stocks plunged after the figures showed a measure of orders declined by the most since December 1980 as a number of companies said adverse weather slowed business. General Motors Co. and Ford Motor Co. said that fewer Americans ventured out to motor-vehicle dealerships during the coldest January in two decades.
The report sent the stock market's benchmark indexes to their biggest declines since June. The Standard & Poor's 500 Index dropped 2.3 percent as investors were concerned that talk of a strengthening economic recovery may have been too optimistic.
"Comments from the panel this month show a mix of concern over severe weather conditions from the coldest January in many, many years," Bradley Holcomb, chairman of the ISM's manufacturing report, said on a conference call with reporters. "The outlook for the rest of the year remains solid. This is a blip on the screen."
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