US factory activity expands

  • 02/07/2016
US factory activity expands

US factory activity expanded at a healthy pace in June as new orders, output and exports rose, new industry data shows.

The data on Friday provided another sign that US manufacturing was regaining its footing after weakness early this year.

But construction spending data for May fell for a second straight month after a steep drop in April, adding to a mixed growth outlook as the effects of Britain's decision to leave the European Union become more apparent.

The Institute for Supply Management reported on Friday that its national factory index rose to 53.2 in June from 51.3 in May.

A reading above 50 indicates expansion in the manufacturing sector, which accounts for about 12 percent of the US economy.

The ISM new factory orders index in June showed a reading of 57.0 compared with 55.7 in May, while export orders showed 53.5 versus 52.5.

The order backlog index rose to 52.5 from 47.0, while production rose to 54.7 from 52.6.

US stocks rose after the ISM data, while Treasury prices trimmed gains.

The US dollar was trading lower against a basket of currencies.

Manufacturing remains constrained by the lingering effects of the dollar's surge and the oil price plunge between June 2014 and December 2015.

The sector has also been hurt by business efforts to reduce an inventory glut, which has curtailed orders.

The Commerce Department said on Friday that May construction spending fell 0.8 percent after a downwardly revised 2.0 percent drop in April.

The revised April drop was the largest since January 2011.

Economists polled by Reuters had forecast construction spending rising 0.6 percent after a previously reported April drop of 1.8 percent.

May construction outlays were up 2.8 percent from a year earlier.

May construction spending was held down by a 2.3 percent drop in public construction spending.

Outlays on state and local construction projects, the largest of the public sector segment, tumbled 3 percent, while federal construction spending rose 7.5 percent.

Private construction spending fell by 0.3 percent after a downwardly revised 1.9 percent fall in April.

Outlays on private residential construction were flat, while spending on private non-residential construction was down 0.7 percent.

Reuters