U.S. factory growth beats expectations
The U.S. manufacturing sector picked up more than expected in June, overcoming a housing market slump, while strength in Germany drove European factory growth, according to data released Monday.
Surveys of purchasing managers at thousands of companies around the globe showed broad-based expansion, with notable accelerations in the United States, Germany and Spain but eye-catching slowdowns in growth rates in Britain and Japan.
The U.S. Institute for Supply Management’s manufacturing index rose to 56.0 in June from 55.0 in May, the highest reading since April 2006. Economists had forecast no change.
The report also brought better news on the inflation front, showing that the prices paid component slipped to 68.0 from 71.0.
The strong growth bolstered expectations that the U.S. economy revived in the second quarter after an anemic start to the year, when the slumping housing market and an effort by businesses to pare inventories crimped growth. Still, some on Wall Street cautioned that the rebound may prove short-lived.
“Inventory declines in the first quarter have given way to a production rebound in the second quarter,” Citigroup economist Steven Wieting wrote in a note to clients.
“However, the pace of end demand has moderated in the quarter, and expansions aren’t built on inventory recoveries. As such, we imagine today’s ISM reading is near the high end of forthcoming readings likely in the current setting.”
The Global Manufacturing PMI, produced by JPMorgan with research and supply management organizations, increased to 54.4 in June from 54.1 in May, its highest level since September.
For the 13-country euro zone, the purchasing managers index rose to 55.6, its best since February and up from 55.0 in May, according to NTC Research, the consulting firm that conducts the surveys.
Germany was the driving force, reporting a five-month high. Spain, the fourth-biggest economy in the currency bloc, also made big gains, as did the Dutch.
France and Italy, the euro zone’s second- and third-largest economies, reported slower growth rates than in May, however.
