ISM's Manufacturing Index Rises for First Time This Year

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he Institute for Supply Management said Friday that manufacturing activity expanded in June for the first time this year.

SM reported its factory index rose to 53.8 from 51.4 in May, following six straight months of declines. The May reading had been the lowest since June 2003.

Readings higher than 50 indicate growth. Analysts had expected the June reading to hold steady at 51.4, Bloomberg reported.

he group's new orders gauge, which makes up about a third of the total index, rose to 57.2, the highest this year, from 51.7 in May. The production index, a measure of work being performed, increased to 55.6 from 54.9.

“The improved rate of growth in new orders is encouraging, particularly when combined with a slower rate at which prices are escalating,” said Norbert Ore, chairman of ISM’s manufacturing committee.

But he added that “high energy costs and the stronger dollar are still major concerns to purchasers.”

SM’s employment index rose to 49.9 from 48.8 in May. The inventories index held steady at 47.8, while new export orders fell to 50.4 from 54.9, ISM said.

ISM, headquartered in Tempe, Ariz., surveys more than 400 companies in 20 industries, including transportation, to compile its index.