Manufacturing sector shows steady growth

It expanded for 13th month; building, auto sectors fell

By: JournalNow Staff | THE ASSOCIATED PRESS
Published: September 02, 2010

WASHINGTON

Manufacturing is growing in the United States and abroad, easing fears that the economy might be on the verge of a second recession.

The U.S. sector expanded for a 13th straight month in August, coinciding with gains in Chinese manufacturing and auto sales.

The news gave Wall Street a boost, with investors overlooking dismal reports on U.S. auto sales and construction spending. The Dow Jones industrial average closed 254 points up.

China's robust growth raises hopes that it will step up its consumption of U.S. exports and help sustain the U.S. economic recovery.

"Companies that have established distribution capabilities in big markets such as China, India and Brazil are doing well," said Brian Bethune, the chief U.S. financial economist at IHS Global Insight. "These markets are pretty much the main game in town until the American household gets out of the intensive care unit."

In the United States, manufacturing is helping nudge the economy out of the worst recession since the 1930s, and factories kept churning out goods last month.

The Institute for Supply Management said yesterday that its manufacturing index rose to 56.3 in August from 55.5 in July. A reading above 50 indicates growth. The trade group's index has surged since late 2009 and hit a six-year high in April.

U.S. factories have seen rising demand for exports and from businesses that are investing in capital equipment and supplies. That has given the economy a lift at a time of uncertainty for the recovery.

Jobs are scarce, the unemployment rate is near double digits, home sales are at the lowest level in 15 years, and the American consumer is not spending enough to give businesses confidence to hire.

Construction activity dropped 1 percent in July, the third straight monthly decline, the Commerce Department said. Government revisions showed much weaker activity than previously reported for May and June.

The auto industry reported its worst August in 27 years. General Motors Co.'s sales fell 7 percent last month from July. Ford saw sales slip 5 percent from July. Subaru also suffered. August is typically a strong month.