NEW YORK — The U.S. manufacturing sector grew in August for the first time in 19 months, adding to evidence that the recession is ending.
The better-than-expected reading Tuesday by the Institute for Supply Management showed its manufacturing index rose to 52.9 in August from 48.9 in July. It was the first reading above 50, which indicates expansion, since January 2008. New customer orders also jumped 10 percentage points to 64.9 in August, a level not seen since late 2004.
And a gauge of future home sales rose more than expected in July to the highest point in more than two years.
The reports raised hopes for a broad economic rebound. Still, as long as consumers remain hamstrung by weak pay and job losses — and wary of ramping up spending — the economy might not be able to sustain a recovery.
“Manufacturing will continue to expand,” but capital investment will decline because plants have too much excess capacity, said Daniel Meckstroth, chief economist for the Manufacturers Alliance, a trade group.
Stocks plunged Tuesday despite the positive housing and manufacturing reports. Analysts said much of the improving economic data already were priced in after a six- month climb in stocks. The Associated Press
