- Dan Greenhaus, chief strategist at BTIG
A better than expected manufacturing data fuels expectations that the world's number one economy will grow at a more robust pace in the second half of the year. However, manufacturers express concerns that international geopolitical turmoil could soften the rebound. The Institute for Supply Management's index for manufacturing sector unexpectedly rose to 59, the highest level since March 2011, up from July's reading of 57.1. August's reading was driven by an advance in a gauge of new orders, which reached the highest level in 10 years. The new orders index correlates closely with quarterly changes in the nation's GDP. American factories are benefiting from a rebound in auto sales and stronger business spending on new plants and equipment that are helping industries rise above the political crisis weighing on Europe. The Commerce Department showed construction spending increased 1.8% in July to the highest level in more than five years. It was the largest monthly increase since May 2012. Faster wage growth is now needed to sustain the rise and broaden household purchases beyond automobiles.
Tuesday's upbeat data added to reports on employment and housing that have indicated growth remains resilient, despite a slowdown in consumer spending in recent months.
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