Manufacturing in the U.S. Midwest expanded at a faster pace than forecast for June, suggesting growth could accelerate in the months ahead. The National Assn. of Purchasing Management-Chicago said its monthly index of regional manufacturing rose to 60.0 this month from 57.9 in May. Analysts had expected a reading of 57.3. Meanwhile, the index of prices paid rose to its highest level in 18 months, and the index gauging orders backlogs rose to its highest level in five years, suggesting Chicago-area manufacturers are having trouble keeping up with demand. Federal Reserve policymakers, worried about that very possibility, on Wednesday raised the overnight bank lending rate from 4.75% to 5%. The central bank wants to slow growth from its current 4% annual pace before inflation can begin to accelerate.
A separate Conference Board projection of economic conditions six months from now suggests that the current expansion, now in its 100th month, will continue and become the longest in history early next year. The board's index of leading economic indicators for May rose 0.3% after falling 0.1% in April.