The US economy appeared to be on course to a stronger recovery yesterday as data showed that factory activity rebounded in June - signalling growth for the first time since February - and an index of leading indicators showed a sharp gain in May.
The figures are the latest in a string of positive, but preliminary, signs over the past week that the recovery the Federal Reserve and other analysts have been predicting may already be under way.
But the reports failed to meet expectations of an even stronger rebound raised this week by a survey of manufacturing in New York state, which was far better than expected. Stocks on Wall Street, already trading lower yesterday, fell further after the release of the report.
Futures markets, responding to press reports of serious consideration by Federal Reserve officials of a half-point interest rate cut at their policy meeting next week, priced in stronger odds of a cut.
The Federal Reserve's index of manufacturing activity across the mid-Atlantic region rose to +4 from -4.8 in May, suggesting a shift from contraction to growth.
A measure of the six-month outlook rose to 52.8 from 45.2 in May - more than 60 per cent of respondents predicted an improvement; only 8 per cent expected the opposite.
The report, based on a survey of local manufacturers, is widely seen as a leading indicator of activity nationwide - a preview of the more authoritative and broad-based survey of the Institute of Supply Management, scheduled for next week.
Separately, the Conference Board, a business research group, said its index of leading economic indicators rose 1 per cent in May - its strongest gain this year. Eight of the 10 indicators that make up the index showed improvement. - ( Financial Times Service)
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