Manufacturing Activity Up in July

Washington, DC, August 1, 2006–A key gauge of strength of the U.S. factory sector picked up unexpectedly in July, the Institute for Supply Management reported Tuesday.

The ISM index rose to 54.7% in July compared with 53.8% in June. The index is still below the year-to-date average of 55.4%.

The price index jumped to 78.5% from 76.5% in June. This is the highest level since a record 84 last October.

The rise was unexpected. The consensus forecast of estimates collected by MarketWatch called for the index to inch lower to 53.6%.

The trade group surveys the purchasing managers at factories around the country. A reading above 50 signals expansion, while a reading below 50 indicates contraction. The index has been above 50 since May 2003.

There was a sawtooth pattern in July. New orders fell, but production increased at a faster pace, picking up the index.

New orders fell to 56.1% from 57.9% in June, while production jumped to 57.6% from 55.1% .

The employment index rose to 50.7% from 48.7%. Backlog of orders fell to 50.5% in July from 54.0% in June. Inventories rose to 50.5% in July from 46.9% in the previous month.