Reports mixed on economy

U.S. manufacturing improved in July with a key gauge of activity rising further into expansion territory, according to the Institute for Supply Management (ISM). Meanwhile, the Commerce Department reported that construction spending fell again in June, the fourth straight amid the coronavirus pandemic. Manufacturing index trends up

The ISM, an association of purchasing managers, said Monday that its manufacturing index rose to 54.2 last month. Any reading above 50 signals that U.S. manufacturing is expanding.

The index dipped below 50 in March, indicating a recession in manufacturing as the coronavirus pandemic shut down factories. The overall economy fell into a recession in February and the government reported last week that the gross domestic product plunged at an annual rate of 32.9% in the April-June quarter, the biggest drop on records going back to 1947.

While it was the second straight month that the index has been above the 50 threshold, indicating manufacturing is expanding again, economists cautioned that the outlook is clouded by spreading infections in the U.S. in the South, West and Midwest.

“Manufacturing is recovering from low levels and the outlook is uncertain, given the threat of repeated disruptions from virus outbreaks,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

Construction spending slides

Spending on U.S. construction projects fell 0.7% in June as both home building and nonresidential activity declined, the Commerce Department said on Monday. Private and government spending on construction both also declined by the same 0.7% figure.

The construction industry has been hammered by shutdowns forced by the coronavirus pandemic. As cases rise again in some parts of the country, there are concerns about further building declines in coming months.

Analysts had expected a turnaround in spending in June as many parts of the country reopened, but it did not happen. May’s number, however, was revised upward.

Nonresidential construction rose 0.2%, led by increases in hospitals and clinics, manufacturing facilities and hotels.

LUKE SHARRETT / BLOOMBERG 2015 The Institute for Supply Management’s manufacturing index rose to 54.2 last month. Any reading above 50 signals that U.S. manufacturing is expanding.