US factories roar ahead

A US economic recovery is coming into focus

The US factory sector is in a better shape than it has been for two-and-a-half years, according to an influential survey.

The economy is in fine shape

Joel Naroff
Naroff Economic Advisors

The survey has raised hopes that the US manufacturing sector might be able to pull the economy towards a rapid recovery.

"The industrial heartland is now the driving force in the economy," said Naroff Economic Advisors president and chief economist, Joel Naroff.

"The manufacturing sector continues to expand," Merrill Lynch economist Stan Shipley said.

The purchasing managers' index compiled by the Institute for Supply Management rose 0.5 point from May to 56.2 in June, its highest level since February 2000.

"The purchasing managers have been upbeat this year," said Mr Naroff.

Rising output

Factory output rose to its highest level in three years, the production index showed.

The index rose to 61.4 points in June from 58.5 points in May.

"The rising output is being driven by robust orders," Mr Naroff said.

The new orders index remained high at 60.8 points in June, though it had slipped a little from 63.1 in May.

And demand was expected to rise in the months ahead, particularly from abroad where the prices of US products are falling as the value of the US dollar is dropping.

"The economy is in fine shape," Mr Naroff said.

"With manufacturing now pitching in, we do not need the consumer to carry the entire load.

"Thus, we can have more moderate, and sustainable, consumption to go along with the robust housing market and an improving industrial sector."