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U.S. manufacturing grows for first time in 4 months

Oct. 02, 2012 @ 07:02 AM

WASHINGTON  — U.S. manufacturing grew for the first time in four months, buoyed by a jump in new orders and more jobs. The increase is a hopeful sign that the economy may be improving after a weak stretch.

The Institute for Supply Management, a trade group of purchasing managers, said Monday that its index of factory activity rose to 51.5. That’s up from 49.6 in August.

A reading above 50 signals growth and below indicates contraction. The index had been below that threshold from June through August.

Most economists were encouraged by the report after weak consumer spending and fewer exports slowed factory production in the spring. Still, they cautioned that economic growth is likely to stay modest until hiring accelerates and consumers spend more.

The reading “will boost hopes that some of the recent slowdown in economic growth was just a summer phenomenon,” Paul Dales, an economist at Capital Economics, said in a note to clients.
Separately, the government said U.S. builders spent more on home construction in August, adding to evidence that housing is recovering.

Overall construction spending dipped 0.7 percent, the Commerce Department said, as spending on commercial projects such as office buildings and shopping centers fell.

In the manufacturing survey, a measure of new orders jumped to 52.3, the highest reading since May. That suggests production will increase in the coming months.

And a gauge of employment rose, a sign that manufacturers may report a gain in jobs when September’s employment report is released Friday. Manufawcturers shed workers in August.
Manufacturers also said they are facing rising costs for corn, fuel and several other commodities.
 

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