US Manufacturing Rebounded Unexpectedly During June
The pace of growth in the U.S. manufacturing sector picked up for the first time in four months in June, a sign of optimism for the sputtering economy, according to an industry report released Friday.
The Institute for Supply Management said its index of national factory activity rose to 55.3 from 53.5 the month before. The reading topped expectations for 51.8, according to a Reuters poll of economists.
A reading above 50 indicates expansion in the manufacturing sector, while a number below 50 means contraction.
The report alleviated some fears over the strength of the recovery but analysts said it was not yet a clear sign that the recent weakness in growth was past.
"It's too soon to say whether the soft patch is over. We had such a big drop last month. We are just seeing some of the retracement. This takes some of the sting out of last month's drop," said Robert Brusca, chief economist at Fact and Opinion Economics in New York.
U.S. stocks added to gains immediately following the data, while Treasury prices turned negative and the dollar extended gains against the yen.
The prices paid index fell to its lowest since August 2010 at 68.0 from 76.5, while inventories rose to 54.1 from 48.7.
But new orders rose only marginally to 51.6 from 51.0 and analysts noted that the details of the report were not as robust as the main figure.
Meanwhile, U.S. construction spending fell for a sixth straight month during May to its lowest in more than a decade, according to a Commerce Department report that underlined the soft pace of activity in building trades that normally are major employers.
Spending on new construction fell 0.6 percent after a matching revised 0.6 percent April drop that previously was reported as a 0.4 percent increase.
Economists surveyed by Reuters had forecast May construction spending would be flat.
Total May spending was at a seasonally adjusted annual rate of $753.48 billion, the lowest rate since $751.4 billion in September 1999, the department said.
Spending on both public and private building projects weakened in May.
Overall private construction fell 0.4 percent and, within that category, spending on new homes and apartment buildings fell 2.1 percent.
Public construction spending for projects like improved highways and streets, new schools and transportation projects declined 0.8 percent in May after a 2.4 percent April fall.