U.S. Manufacturing Likely Expanded For 23rd Straight Month

WASHINGTON (AP) — The U.S. manufacturing sector likely expanded in July for the 23rd month, though at a slower pace than the previous month.

Economists expect the Institute for Supply Management's index of manufacturing activity dipped to 55 from 55.3 in June, according to a survey by FactSet. Any reading above 50 signals growth.

The index will be released at 10:00 a.m. Monday.

The figure will be closely watched for any hints the economy is reviving, after growth slowed sharply in the first half of this year. The economy expanded at a dismal 1.3 percent annual rate in the April-June period, the government said Friday. That came after an even worse 0.4 percent increase in the first three months of the year.

Both figures were worse than economists expected and prompted many of them to lower their forecasts for the rest of this year.

The factory sector has been a driving force behind the economic recovery and has expanded in every month but one since the recession ended in June 2009. But manufacturing represents only about 11 percent of U.S. economic activity and can contribute only so much to the broader economic recovery.

Manufacturing activity slowed sharply in the spring. A parts shortage stemming from Japan's March 11 earthquake disrupted automakers' supply chains, cutting into the output of new cars. And high gas prices also reduced consumers' ability to spend money on other items.

That caused the ISM's manufacturing index to plummet in May to 53.5 from April's reading of 60.4. That was the sharpest one-month drop since 1984.

In June, the index ticked back up to 55.3. Other measures of factory output, however, were flat in June.

Several regional manufacturing surveys for the month of July have been mixed. The Philadelphia Federal Reserve Bank said its manufacturing index rose to 3.2, signaling that the sector is growing again in that region. It had contracted in June for the first time in nine months.

And a private survey in Chicago showed that manufacturing expanded in July, but at a slower pace than in June.

Meanwhile, a survey by the New York Federal Reserve Bank found regional manufacturing activity shrank in July.

The ISM, a trade group of purchasing executives based in Tempe, Ariz., compiles its manufacturing index by surveying about 300 purchasing executives across the country.