September 7, 2004

Public works, residential top the list

U.S. construction spending hits an all-time high in July

NEW YORK

Manufacturing activity in the United States rose in August for the 15th consecutive month, but at a slower rate than reported in July, according to the newest monthly report released by the Institute for Supply Management (ISM).

The ISM’s index for manufacturing activity stood at 59 in August, three points below the 62 recorded in July and just below the level that analysts were expecting.

Nonetheless, the survey, together with a separate report showing that construction spending hit an all-time high in July, painted an overall positive picture for the economy and suggested that, despite some bumps, the economic ex- pansion remained solid.

The U.S. Commerce Department reported that construction spending bounced back in July to the highest level on record.

Following a lull in June, the spike in July meant that the value of buildings put in place came in at a seasonally adjusted annual rate of $997.2 billion, an all-time high level and a 0.4 per cent increase over June.

The gains were broadly based, with spending by private builders on residential units and spending by government on big public works projects each coming in at all-time highs in dollar terms.

Any reading in the ISM index above 50 means that manufacturing is expanding, while below 50 means activity is contracting. The index has been above 50 since June 2003.

Overall, the ISM report indicated healthy activity in the manufacturing sector, while showing some weak spots such as concerns among manufacturers over rising energy costs, higher prices for basic materials, especially steel, and slowing growth in sales.

The Associated Press

Print | Comment