By Jeannine Aversa
The Associated Press
WASHINGTON - America's manufacturers saw demand for their products rise in June by the largest amount in three months, another encouraging sign that the fragile factory sector is on the mend along with the rest of the economy.
The Commerce Department reported Monday that orders to U.S. factories rose 1.7 percent from May, the second month in a row that orders went up. Gains were fairly broad-based, with orders rising for machinery, household appliances and automobiles as well as "nondurable" goods, such as food products and chemicals.
June's performance, which followed a 0.3 percent rise in May, was stronger than economists were expecting; they were forecasting a 1.5 percent increase in factory orders.
Monday's report, along with other recent data on factory activity, suggest the industry is turning a corner.
A report released Friday showed that manufacturing expanded in July for the first time in five months. The Institute for Supply Management's manufacturing index rose to 51.8 in July, up from 49.8 in June. A reading below 50 indicates that manufacturing activity is slowing, and a reading above 50 indicates it is growing.
"Manufacturing is healing," said Clifford Waldman, an economist at the Manufacturers Alliance/MAPI, a research group. "But it is not entirely clear to me that we can yet say we reached a new cycle of self-sustaining expansion. Some of this reflects a bounce back from the war period and pent-up business demand."
On Wall Street, the Dow Jones industrials gained 32.07 points to close at 9,186.04.
Manufacturing has had the hardest time trying to get back on firmer footing after being knocked down by the 2001 recession. Faced with lackluster demand at home and abroad as well as competition from a flood of imports, factories have throttled back production and cut jobs.
Even with indications that manufacturing is picking up, employment in that sector isn't expected to show improvement any time soon, economists say. The sector lost 71,000 positions in July, marking the 36th month in a row of job losses.
Construction report revised
An error in a government economic report caused spending on construction projects in June to be underestimated. Construction spending rose last month by 0.3 percent as opposed to being flat, the Commerce Department said Monday.
With the correction, construction spending climbed to a seasonally adjusted annual rate of $872.5 billion in June, a 0.3 percent increase from May's level. The department had reported on Friday that construction spending was flat at $864.3 billion.
On the Net:
Factory orders: http://www.commerce.gov/
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