WASHINGTON • Factory activity expanded in June at the fastest clip in more than a year, an encouraging sign that American manufacturers are gaining traction.
The Institute for Supply Management's index increased to 53.2 last month, exceeding the most optimistic projection in a Bloomberg survey of economists, from 51.3 in May, data showed yesterday.
Improving consumer spending is helping pull manufacturing out of a prolonged slump that began in early 2015 as a surging dollar hurt exports and the slump in oil prices curbed investment in the energy industry. Strengthening indexes of bookings and production, which reached three-month highs, signal factory gains will be sustained.
"The manufacturing sector had been in the middle of a pretty significant downdrift in activity pretty much since the middle of 2014, and it's only started to find a footing in the last two to three months," Mr Thomas Simons, a money market economist at Jefferies in New York, said. There may not be "a big acceleration in growth, but I do think we're going to see modest improvement month to month".
Data by financial firm Markit showed the Purchasing Managers' Index (PMI) at 51.3 in June, up from May's reading of 50.7. Readings higher than 50 indicate growth in the industry .
Meanwhile, euro-area manufacturing grew faster than initially estimated in June, recording its best performance this year. The PMI rose to 52.8 from 51.5, slightly higher than the flash estimate of 52.6, Markit Economics said yesterday. Growth was led by Germany and Austria, and expansion also gathered pace in Spain, Ireland and Italy.
The results were collected prior to the result of Britain's European Union referendum, which saw the country vote to leave the bloc.
Eurostat said in a separate report that unemployment in the 19-nation region fell to 10.1 per cent in May, the lowest in almost five years.
"Any Brexit impact is yet to be seen," said Mr Chris Williamson, chief economist at Markit. "It seems likely that business and consumer spending will be adversely affected across the euro area in the short term at least."