Manufacturing posts year of growth
July production, new orders up
WASHINGTON — It’s a rare bright spot in an otherwise troubled economy: The nation’s manufacturing sector has now grown for a solid year, and more of its companies say they are ready to hire.
Chip maker Texas Instruments says its business has recovered to prerecession levels. Intel, which makes semiconductors, posted its best quarterly profit in a decade. And chemical giant DuPont says its sales volume is up. It recently raised prices.
The Institute for Supply Management said yesterday that its manufacturing index slipped in July to 55.5, from 56.2 in June. But it was the 12th straight month of readings above 50, which indicates expansion. At the depths of the recession, the index was closer to 30.
“Yes, the pace eased back a touch, but it was nothing to be worried about,’’ said Joel Naroff, the president and chief economist for Naroff Economic Advisors.
Measures of production and new orders, which signal future business, both grew again, although more slowly than in June. And more manufacturers said they were willing to hire people.
The report, which comes out on the first business day of the month, surveys production managers at about 400 companies around the country, makers of products ranging from furniture and computers to food and tobacco.
Manufacturing growth has cooled for the past three months, but most of that was expected. The industry experienced strong growth last year because companies were replenishing their stockroom shelves after the recession.
Manufacturing accounts for about one-fifth of US economic activity, so it can’t carry the recovery on its own. But at a time when the housing market, consumer spending, and other sectors of the economy are limping along, any sustained growth is welcome news.
The service sector, which employs 80 percent of Americans, has lagged as high unemployment has made people nervous about spending money.
The housing market has struggled since a tax credit for home buyers expired in April, a point confirmed yesterday by a separate report that showed construction spending edged up slightly in June, but with all the strength coming from government building.
The July report suggests that manufacturing will grow for the rest of the year, and more quickly than the broader economy, said Dan Meckstroth, chief economist for the Manufacturers Alliance/MAPI, an industry association.