Manufacturing in the U.S. shrank less in May than forecast, further evidence that international demand for American-made goods was keeping factories busy amid the domestic economic slump.
The Institute for Supply Management said Monday that its factory index rose to 49.6 from 48.6 in April. A number below 50 indicates contraction, and a number greater than that denotes expansion. Production expanded for the first time in three months, while a measure of prices rose to the highest level since 2004, the group also reported.
The figures, along with a Commerce Department report showing April construction spending dropped less than forecast, eased concern that the economic downturn would intensify. U.S. gross domestic product rose at a 0.9% pace in the first quarter, capping the weakest six-month performance in five years, the government said last week.
"These reports are showing some stabilization in the economy," said Peter Kretzmer, a senior economist at Bank of America Corp. in New York. "There is just a very strong level of competitiveness for U.S. manufacturing firms."