US manufacturing picks up the pace

WASHINGTON • Manufacturing in the United States unexpectedly expanded at a faster pace last month, helped by an increase in orders that signals US factories are rebounding from an early-2016 slump.

The Institute for Supply Management's index climbed to 51.3 from 50.8 in April, figures showed yesterday. Readings above 50 indicate growth.

Factories are using a pick-up in bookings from the US and abroad to help trim stockpiles, laying the ground for bigger gains in production later in the year. The recent pick-up in oil prices will probably also help stem the slump among energy producers that has contributed to weak business investment.

"Manufacturing will be on a slow, gradual path of improvement," Mr Sam Bullard, a senior economist at Wells Fargo Securities, said before the report.

On the other hand, US construction spending recorded its biggest decline in more than five years in April, as outlays fell broadly, which could prompt economists to lower their second-quarter growth estimates.

Construction spending tumbled 1.8 per cent after an upwardly revised 1.5 per cent jump in March, the Commerce Department said yesterday.

Tuesday's data on consumer spending showed a pick-up in almost seven years in April.

The Fed is also set to release its Beige Book, which details anecdotal information on economic conditions in the different Fed districts.

The data allows Fed officials to gauge whether their forecast for moderate growth and steady job market improvement remains on track - potentially giving them a green light to raise interest rates.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on June 02, 2016, with the headline 'US manufacturing picks up the pace'. Print Edition | Subscribe