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Manufacturing Is One Of Strongest Sectors Of Economy

Wed, 07/27/2011 - 5:20am

WASHINGTON (AP) — Businesses likely boosted their orders for long-lasting manufactured goods by a modest amount in June, helped by increases in demand for machinery.

Economists surveyed by FactSet expect to see a 0.3 percent rise in orders for durable goods for June. The Commerce Department will release the new report at 8:30 a.m. Wednesday.

In May, durable goods orders rose 2.1 percent as U.S. companies boosted their orders for machinery, electronics products and airplanes. That increase followed a sharp 2.7 percent decline in durable goods orders in April. The April setback was largely the result of supply disruptions caused by Japan's March 11 earthquake and tsunami. The inability to get critical component parts in such industries as autos and electronics slowed U.S. manufacturing.

But economists believe the supply chain disruptions are easing and they are looking for manufacturing to show further gains in coming months. As production returns to normal in Japan, U.S. factories should rebound, economists are forecasting.

The Federal Reserve reported that auto production fell 2 percent in June, the third straight month of declines for autos. U.S. automakers have had trouble getting component parts out of Japan. Overall industrial production showed a slight 0.2 percent rise in June. Gains in mining and utilities offset a flat reading for factory output.

Manufacturing has been one of the strongest sectors of the economy since the recession officially ended two years ago.

A closely watched gauge of manufacturing activity grew more strongly in June after a sluggish May. The Institute for Supply Management's manufacturing index rose to 55.3 last month after a May reading that was the weakest in 20 months. A reading above 50 indicates manufacturing is continuing to expand.

Caterpillar reported last week that robust demand for its heavy equipment boosted the company's second quarter profits by 44 percent. But even with the gain, the company's quarterly profits fell short of Wall Street estimates for the first time since the recession ended in June 2009.

 

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