Manufacturing sector expands at faster pace in July

The manufacturing sector expanded last month at the fastest rate since November.

The Institute for Supply Management (ISM), a group of purchasing managers, said Friday that its manufacturing index rose to 57.1, up from 55.3 in June.

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New orders, production and employment all increased while exports and inventories growth slowed.

Any index measure above 50 reflects growth.

"After declining sharply in January, sentiment has gradually moved higher each month, with the sector rebounding from winter-related disruptions and slow growth in the first quarter of this year," said Chad Moutray, chief economist at the National Association of Manufacturers.

"These findings are largely consistent with other indicators showing manufacturers cautiously optimistic about the next six months," he said.

The economy bounced back from a 2.1 percent contraction in the first quarter with 4 percent annual growth in the April-June quarter, according to a Commerce Department report this week.

Plus, employers added more than 200,000 jobs in July for the sixth straight month, the best streak since 1997.

In July, there were 209,000 jobs added and the unemployment rate rose to 6.2 percent as more people entered the job market. 

The ISM report, showed that the production index increased to 61.2 from 60, the third straight month above 60.

New orders rose to 63.4, from 58.9, and employment pushed up to 58.2, from 52.8.

Friday's jobs report showed that manufacturers added 28,000 jobs in July.

A transportation equipment executive said, “business is still very good and we are very optimistic for the rest of the year" while a respondent from the computer industry said “overall business conditions still good in our industry.” 

But there was some concern that “geopolitics still present a considerable risk as well as the European market.”

Meanwhile, exports fell to 53, from 54.5, while inventories fell to contracting, dropping to 48.5, from 53.