Posted on: Friday, July 2, 2004

Factory growth sustained in June

By Adam Geller
Associated Press

NEW YORK — Manufacturing activity increased again in June, pointing to moderating but sustained expansion in that key sector, while May construction spending increased as well — more good signs for the rebounding economy.

The Institute for Supply Management said yesterday its manufacturing index declined to 61.1 last month from 62.8 in May. That was somewhat lower than the 61.5 forecast by analysts, but a reading above 50 indicates expansion.

The gauge's June reading shows manufacturing activity expanded for a 13th straight month, growing at a still robust, but more measured pace, analysts said.

"A slower pace that is still a solid pace is what these numbers are beginning to point to and that's key," said Joel Naroff of Naroff Economic Advisors in Holland, Pa. "This is a level that's still very good but will create fewer inflationary pressures."

The new reading helps put to rest any doubts that the manufacturing sector was pausing in its rebound, said Sung Won Sohn, chief economist at Wells Fargo & Co. in Minneapolis.

"We are still talking about a very high level of activities," Sohn said. "Starting from a very low base, we are still seeing some strength."