U.S. factories show vulnerability to chill in global economy

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REUTERS/MICHAEL SPOONEYBARGER

The pace of growth at U.S. factories slowed in September, a sign that the chill falling over the global economy could complicate the Federal Reserve’s plans to raise interest rates.

Other data on Thursday pointed to a tightening labor market and stronger spending on home construction, highlighting the split in the economy between strong domestic growth and weakness abroad.

This is causing headaches at the Fed, which cited concerns last month about “global economic and financial developments” when it surprised much of Wall Street by holding off on hiking rates.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 50.2, its lowest since May 2013 and just below the median forecast in a Reuters poll.

While any reading above 50 indicates expansion in manufacturing, growth has slowed sharply over the last year as a strong dollar has crimped exports.

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