July 4, 2008

U.S. manufacturing activity expands, construction spending declines

NEW YORK

U.S. manufacturing activity expanded for the first time in five months in June, thanks to strong exports, but the minimal growth came as inventories climbed and prices rose for every commodity except copper, a private industry group said on Tuesday.

The reading of 50.2 from the Institute for Supply Management was up from 49.6 in May. It beat economists’ prediction of a reading of 48.7, according to the consensus estimate of Wall Street economists surveyed by Thomson Financial/IFR. A reading above 50 signals growth.

Construction spending underlined the weakness, falling in May for the eleventh time in the past year, dropping 0.4 per cent, according to the Commerce Department.

For the previous four months, the overall manufacturing index had hovered near its lowest level in five years.

Manufacturers are “experiencing higher prices for their inputs while demand for their products is slowing,” Norbert J. Ore, chairman of ISM’s manufacturing business survey committee, said in a statement accompanying the report.

Associated Press

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