- The Washington Times - Monday, August 1, 2005

NEW YORK (AP) — Manufacturing activity grew at a faster pace in July than in June, driven by new orders and increased production, a private research group said yesterday.

Economists said strong sales in the auto industry helped propel the results as the Institute for Supply Management (ISM) reported its manufacturing index rose to 56.6 last month, up from 53.8 in June and greater than the 54.1 that analysts were expecting.

It was the 26th consecutive monthly increase in the index. A reading of 50 or more in the index means the manufacturing sector is expanding. A figure less than 50 represents a contraction.

The new-orders index rose to 60.6 last month from 57.2 in June, while the production index surged to 61.2 from 55.6 a month earlier.

Lower prices also helped fuel the rise in the overall index. The price index decreased to 48.5 in July from 50.5 in June. The dip marked an end to 40 consecutive months of higher prices.

“The prices index apparently reached the end of its run in June, as the July index indicates that pricing power, at least for the short term, is now once again favoring buyers” Norbert J. Ore, chairman of ISM’s Manufacturing Business Survey Committee, said in a prepared statement.

Still, that does not necessarily indicate prices are on a downward trend.

“Month to month, I think we will see volatility given energy prices,” said Mark Zandi, chief economist at Economy.com, a consulting firm.

Meanwhile, the Commerce Department said yesterday that builders trimmed spending on construction projects across the country in June, marking the fourth consecutive monthly cutback. Analysts has expected a rise of 0.5 percent.

Spending on all construction projects dipped by 0.3 percent in June from the previous month.

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