ISM: U.S. Manufacturing Continued to Expand in July -- Update

By Jeffrey Sparshott Features Dow Jones Newswires

U.S. factory activity expanded for the 11th consecutive month in July, highlighting steady economic growth heading into the second half of the year.

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The Institute for Supply Management on Tuesday said its index of U.S. manufacturing activity fell to 56.3 in July from 57.8 in June. A number above 50 indicates expansion.

Economists surveyed by The Wall Street Journal had expected a July reading of 56.2.

The closely watched gauge has been above the break-even mark every month for nearly a year. So far in 2017, it has averaged 56.4, significantly better than the 51.4 average of the prior two years.

"The headline ISM manufacturing index and many of its subcomponents are consistent with an improvement in business sentiment and activity in the sector as it comes out of the doldrums of the past two years," Blerina Uruci, economist at Barclays, said in a research note.

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. Stronger growth overseas, a weaker dollar and some stability for oil prices have helped bolster factory fortunes in recent months.

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The survey found "expanding business conditions, with new orders, production, employment, backlog and exports all growing in July compared to June," ISM said.

The pace of growth, however, softened from July's three-year high. The survey's index for new orders fell to 60.4 from 63.5, production was down to 60.6 from 62.4 and employment to 55.2 from 57.2.

Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com

(END) Dow Jones Newswires

August 01, 2017 11:52 ET (15:52 GMT)