New York: Manufacturing expanded in February for a seventh consecutive month, indicating factories are leading the US economic recovery, economists said before a report yesterday.
The Institute for Supply Management's index declined to 58, according to the median estimate of 63 economists surveyed, from a January reading of 58.4 that was the highest since August 2004. A figure higher than 50 signals expansion. Other reports may show consumer purchases rose and construction spending declined in January.
Factories are boosting production to replenish depleted inventories and investing in new equipment as global demand picks up following the worst recession in seven decades. The manufacturing revival may help lead to the job growth needed to propel consumer spending and the economy.
Building stockpiles
"Manufacturing is helping carry the economy," said Ryan Sweet, a senior economist at Moody's Economy.com in Moody's Economy.com in West Chester, Pennsylvania. "Manufacturers are set to build up stockpiles over the next few months, which will support both production and employment."
Figures from the Commerce Department may show personal spending rose 0.4 per cent in January after a 0.2 per cent gain the prior month, according to the median estimate of economists surveyed by Bloomberg.
Incomes probably increased 0.4 per cent for a second month, according to the survey median.
Government stimulus efforts last year helped spark rebounds in the housing and automobile industries, two of the most depressed areas during the recession. After car sales surged mid-year on incentives, automakers are now boosting output to rebuild inventories.
Factory orders have been increasing after companies pared inventories last year by a record $120 billion (Dh440.4 billion). Efforts to rebuild depleted stockpiles contributed 3.88 percentage points to a fourth-quarter growth rate of 5.9 per cent that was the strongest in more than six years, the Commerce Department said last week.
Among carmakers rebuilding inventory, Chrysler Group LLC, the third largest US automaker, produced 88,623 vehicles in January, compared with 39,315 a year earlier, according to company data.
