US manufacturing posts surprise growth in April

Manufacturing unexpectedly expanded in April at the fastest pace in 10 months, driven by gains in orders and production that signal the US remains a source of strength for the global economy.

By Alex Kowalski (Bloomberg)

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Published: Thu 3 May 2012, 12:10 AM

Last updated: Tue 7 Apr 2015, 12:24 PM

The Institute for Supply Management’s factory index climbed to 54.8 last month, exceeding the most optimistic forecast in a Bloomberg survey, from 53.4 in March, the Tempe, Arizona-based group’s report showed on Tuesday. Readings greater than 50 signal growth. The median forecast in the Bloomberg survey called for a drop to 53. Measures of production and orders were the highest in a year.

Stronger demand for automobiles is bolstering American manufacturing at a time when factories in other parts of the world are paring production as growth cools. At the same time, the industry faces headwinds from smaller gains in business investment, less contribution from inventories and recession in parts of Europe.

“Manufacturing is still in pretty good shape,” said Scott Brown, chief economist at Raymond James & Associates in St Petersburg, Florida, who projected an increase in the factory index. “US manufacturing will outperform its counterparts in Europe. At the points, we’re in a steady-state expansion” in the economy, he said.

Stocks climbed after the figures, with the Standard & Poor’s 500 Index increasing 0.8 per cent to 1,409.7 points at 10:37am in New York. The yield on the benchmark 10-year Treasury note rose to 1.95 per cent from 1.91 per cent late on Monday. Estimates of the ISM index ranged from 52 to 54. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.

The ISM’s production index climbed to 61 in April, the highest since March 2011, from 58.3. The new orders measure increased to 58.2, the strongest since April 2011, from 54.5. Fifteen of the 18 industries reported growth in orders and production in April and none indicated a decline. The gauge of export orders rose to 59 from 54.

Elsewhere, a UK manufacturing index fell more than forecast in April as export orders declined the most since May 2009. The gauge of factory output, based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply, dropped to 50.5, the lowest this year, from a revised 51.9 in March, Markit said on its website on Tuesday.


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