Manufacturing grows for fourth straight month; pace faster than previous month
Monday, June 3rd 2002, 12:00 am
By: News On 6
NEW YORK (AP) _ Manufacturing activity grew for a fourth straight month in May, and at a faster pace than the previous month, signs that recovery in the battered sector is gaining strength, an industry group reported Monday.
The Institute for Supply Management said its index of business activity rose to 55.7 percent in May from 53.9 percent in April. Analysts had been expecting a reading of 55.0.
An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction.
``May was a good month for manufacturing,'' said Norbert J. Ore, chairman of the institute. ``Sixteen industries saw improvements in new orders. This should help establish momentum in the sector that will carry forward into the third quarter.''
The institute measure is closely tracked by economists because it offers an early reading on the health of the manufacturing sector. Its index is based on a survey of purchasing executives who buy the raw materials for manufacturing at more than 350 companies.
On Wall Street, stocks were mixed in morning trading, with the Dow Jones industrial average gaining 43 points at 9,968 and the Nasdaq composite index losing 1 point at 1,615.
To help boost the economy, the Federal Reserve slashed short-term interest rates 11 times last year. But citing signs of a rebound, the Fed opted to leave rates _ now at a 40-year low_ unchanged at its three meetings so far this year.
The institute's report and other recent data appeared to signal a continued recovery for manufacturers. Manufacturers have been the hardest hit by the downturn in the economy, which slid into a recession in March 2001.
The Commerce Department reported last month that orders for durable goods_ items expected to last at least three years _ jumped a larger-than-expected 1.1 percent in April, following a 0.2 percent increase the month before.
Earlier Monday, the Commerce Department reported that construction spending edged up in April to a seasonally adjusted annual rate of $871.9 billion, representing a 0.2 percent increase over March's level.
In Monday's ISM report, of the 20 industries tracked, 18 reported overall growth last month, Ore said.
They included petroleum; textiles; rubber and plastic products; transportation and equipment; furniture; glass, stone & aggregate; instruments & photographic equipment; primary metals; wood & wood products; fabricated metals; electronic components & equipment; tobacco; paper; chemicals; printing & publishing; food; industrial & commercial equipment & computer; and apparel.