Business

<< Previous   of   Next >> (click to enlarge) Associated Press An ironworker walks a beam in the roof structure of the Lucas Oil Stadium in Indianapolis on Thursday. The stadium will be the new home of the Indianapolis Colts NFL team. Construction activity plunged in July as spending on homes fell for a record 17th straight month.   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Wednesday, September 5, 2007 Economy to lean on exports as manufacturing slows Associated Press WASHINGTON A slowdown in manufacturing and construction means the economy needs to rely even more on exports to sustain growth. Turmoil in the housing and financial markets appears to be spilling over to the broader economy, according to data released Tuesday that showed expansion in the manufacturing sector slowed in August while construction spending dropped sharply in July. Although exports remain a bright spot, analysts don't expect overseas sales to accelerate enough to prevent U.S. economic growth from slowing in the second half of this year. "The debate is over whether the economy will be soft, very soft, or in recession," said John Shin, a senior economist at Lehman Brothers who forecasts growth to slow to a 2 percent annual rate in the third quarter, down from 4 percent in the second quarter. The Institute for Supply Management, an organization of corporate purchasing executives based in Tempe, Ariz., said its manufacturing index registered 52.9 in August, down from 53.8 in July and slightly below the expectations of Wall Street economists. Readings above 50 indicate expansion. The Commerce Department, meanwhile, said construction spending dropped 0.4 percent in July, compared with June, the weakest showing since January. It was a bigger drop than economists had been expecting and underscored the drag the housing slump is having on building activity. Economists blame the expected weakness later this year on a slowdown in consumer spending, resulting from declining home values and reduced credit availability. Export growth continues to bolster the manufacturing sector, however, and will counteract some of the effect of the housing slowdown, economists said. "I think it's going to be a draw," said Mark Zandi, chief economist for Moody's Economy.com, referring to the impact of exports and housing on the economy. Zandi expects that exports will be even more important next year, as the impact of the housing slump declines and global economic growth continues to increase demand for U.S. goods overseas. U.S. manufacturers of aircraft, medical devices and agricultural and construction equipment will continue to benefit from a weak U.S. dollar, economists said, which makes U.S. goods less expensive abroad. Boeing Co., for example, expects to deliver 515 to 520 planes next year, with approximately 70 percent going overseas, said Jim Proulx, a company spokesman. That's up from the 440 to 445 the company is on track to deliver this year. Construction and agricultural equipment maker Deere & Co. said last month that its third-quarter profit jumped 23 percent on strong international sales. Approximately 30 percent of the farm and construction equipment made in the United States is for export, according to Tom Runiewicz, industrial economist at consulting firm Global Insight. The ISM survey found that manufacturing exports remained healthy, with the new export orders index increasing to 57 from 56.5 in July. There were several other positive signs for the economy in the ISM survey. The production and employment indices increased, while new orders declined but remained above 50. "Overall, this report reinforces other indicators showing modest but uneven growth across the manufacturing sector," David Resler, chief economist at Nomura Securities, wrote in a research note.

1. Emory’s owner fears fire was arson 2. Monroe honking case makes it to state Supreme Court 3. Vatican ponders the souls in space 4. 81 veterans' names, 81 meaningful lives honored in Snohomish 5. Hope dims that Olympics will boost region 6. Student hit in crosswalk to return 7. Smokey Point to celebrate end of roadwork 8. Death on Edmonds waterfront ruled a suicide 9. Help for young moms may continue 10. Semifinal slate sealed on ‘Dancing With Stars’ 2 - Top 10 Stories Most Talked about 3 - Top 10 Stories Most Emailed

• Bazaar Fever • Hawks proud of historic season • Olson always put Edmonds first • Honoring student veterans • ‘Wheedle' author comes to Lynnwood bookshop • Mavs build early lead en route to easy win • Prep football games of the week (state playoffs) • Tears of laughter, tears of grief • Death on Edmonds beach likely a suicide • Boeing will build, flight test and deliver 787s in South Carolina to spe ... • Snohomish County EDC promoting job growth in key industry clusters • $4 million grant to advance brain tumor research has Everett links • Providence medical center construction tops off its 12-story steel frame ... • Tulalip affordable housing project to be financed by KeyBank, Raymond Ja ... • Arlington's Lak of Ink has a growing following for Luke Kooyman's creati ... • Bank of the Northwest formed • Cascade Bank earns $1.6 million