Manufacturing data beats expectations

Tue Jul 1, 2008 10:31am EDT

NEW YORK (Reuters) - U.S. factory activity expanded unexpectedly in June but inflation pressures soared, according to a report released on Tuesday.

The Institute for Supply Management said its index of national factory activity rose in June to 50.2 from 49.6 in May after four straight months of contraction.

Economists' median forecast was for a result of 48.6, according to a Reuters poll. The 81 forecasts in the survey ranged from 46.0 to 50.5.

A reading below 50 represents contraction in the factory sector. June's reading was the first above 50 since January.

The index of prices paid jumped to 91.5 from 87.0 in May, for the highest reading since 1979.

(Reporting by Burton Frierson; Editing by James Dalgleish)