US manufacturing likely expanded at slightly faster pace in August, economists forecast

Economic IndicatorsAssociated Press

The Institute for Supply Management reports on U.S. manufacturing, orders and other activity in August. The ISM, a trade group of purchasing managers, will release its manufacturing index Tuesday at 10 a.m. Eastern time.

SLIGHT GAIN: Economists forecast that the index ticked up to 57.3 in August, from 57.1 in July, according to a survey by FactSet. Any reading higher than 50 signals that manufacturing is expanding.

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July's reading was the highest in more than three years, and up from 55.3 in June. A measure of production in the report rose to its highest level in seven months, and gauges of employment and new orders also soared.

BUSY FACTORIES: Factory output rose 1 percent in July, the sixth straight monthly gain, according to a report earlier this month by the Federal Reserve. Production of autos, furniture, textiles and metals all rose.

Meanwhile, orders for big-ticket factory goods such as autos and appliances soared in July, though the gain mostly reflected a huge jump in demand for commercial aircraft.

Excluding the transportation category, orders actually slipped last month. And a key category that serves as a proxy for business investment plans fell 0.5 percent. But that followed a big 5.4 percent gain the previous month.

Greater consumer spending may be needed to keep driving factory growth. Consumers cut back their spending 0.1 percent in July, the government said, the first decline since January. The decline was led by lower spending on autos.

Greater manufacturing output is helping boost growth. The U.S. economy grew 4.2 percent in the April-June quarter, the government said last week. That was much better than the 2.1 percent contraction in the first three months of the year.