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US manufacturing expands at fastest pace in more than a year
[WASHINGTON] Factory activity expanded in June at the fastest clip in more than a year, an encouraging sign that American manufacturers are gaining traction.
The Institute for Supply Management's index increased to 53.2 last month, exceeding the most optimistic projection in a Bloomberg survey of economists, from 51.3 in May, data from the Tempe, Arizona-based group showed on Friday.
Improving consumer spending is helping pull manufacturing out of a prolonged slump that began in early 2015 as a surging dollar hurt exports and the slump in oil prices curbed investment in the energy industry. Strengthening indexes of bookings and production, which reached three-month highs, signal factory gains will be sustained.
"The manufacturing sector had been in the middle of a pretty significant downdrift in activity pretty much since the middle of 2014, and it's only started to find a footing in the last two to three months," Thomas Simons, a money market economist at Jefferies LLC in New York, said before the report. There may not be "a big acceleration in growth, but I do think we're going to see modest improvement month to month."
While the ISM's export orders index climbed to the highest level since Nov 2014 - a tentative sign that global demand is beginning to stabilize - the group will issue results later Friday of a separate survey detailing the impact of the UK's vote to leave the European Union.
Readings higher than 50 indicate growth in the industry, and the Bloomberg survey median called for the June index to hold at 51.3. Economists' estimates ranged from 50 to 52.5.
The new orders gauge rose last month to 57 from 55.7, while the index of bookings from overseas customers advanced by 1 point to 53.5.