U.S. Manufacturing-Sector Activity Accelerated in June -- Update

By Ben Leubsdorf Features Dow Jones Newswires

U.S. factory activity picked up in June, a sign of strong momentum in the manufacturing sector and the latest suggestion of health in the broader economy.

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The Institute for Supply Management on Monday said its index of U.S. manufacturing activity rose to 57.8 in June, its highest level since August 2014, from 54.9 in May. A number above 50 indicates expansion; economists surveyed by The Wall Street Journal had expected a June reading of 55.5.

Monday's report "provides further evidence that the prospects for the manufacturing sector remain bright," said Andrew Hunter, U.S. economist at Capital Economics, in a note to clients.

The closely watched gauge has signaled expansion in the manufacturing sector for 10 consecutive months, and the details of the latest report were broadly upbeat.

"Everything was strong," said Timothy Fiore, who oversees the ISM survey.

The new-orders index rose to 63.5 in June and the production index was up to 62.4. The employment index increased to 57.2 last month. The index tracking new export orders rose to 59.5 in June.

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The prices index declined to 55.0 last month, signaling slower growth in costs for raw materials. U.S. inflation has softened in recent months, though some top Federal Reserve officials have blamed one-off factors and said they expect low unemployment will push up wages and prices going forward.

Among 18 industries tracked in Monday's report, 15 reported growth during June while three reported contraction.

Manufacturing accounts for only about 12% of U.S. economic output, but the sector is closely watched for signals about the trajectory of the wider economy.

Falling oil prices, choppy growth overseas and a strong dollar all put stress in recent years on U.S. factories, which faced reduced demand from the energy industry and overseas customers. Industrial activity stabilized last year, though oil prices have moved lower in recent weeks.

U.S. manufacturing production in May was up 1.4% from a year earlier, according to Federal Reserve data. The Commerce Department last week said orders for durable goods, long-lasting products made by U.S. factories, rose 2.8% in the first five months of 2017 compared with a year earlier.

Write to Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

July 03, 2017 11:04 ET (15:04 GMT)