US manufacturing picks up

05-07-2011

US manufacturing picked up for the first time in four months in June, fueling optimism that the recent economic slowdown will be temporary.

But while manufacturing has been a sweet spot in the US economic recovery, consumer spending, which accounts for about 70 per cent of the nation’s economic activity, has failed to return to robust levels.

And despite recent strong growth in manufacturing, economists caution it is too soon to tell if economic growth has turned a corner.

According to Reuters, the Institute for Supply Management its index of national factory activity rose to 55.3 in June from 53.5 in May, after it had slumped to its lowest level since September 2009.

The reading topped expectations for 51.8, according to a Reuters poll of economists.

One of the biggest factors behind the increase in the rate of growth was a jump in inventory building by manufacturers, which some economists said could be a sign of confidence that the economic recovery would gather speed later this year.

The employment gauge also rose, but new orders increased only slightly, and exports fell.

The prices paid index fell to its lowest since August last year, further easing concerns about inflation.

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