By Courtney Schlisserman
Sept. 1 (Bloomberg) -- Manufacturing in the U.S. probably expanded in August for the first time in 19 months, helping lead the economy out of the worst recession since the 1930s.
The Institute for Supply Management’s factory gauge increased to 50.5 from 48.9 in July, according to the median of 74 forecasts in a Bloomberg News survey. Fifty is the dividing line between expansion and contraction. Other reports may show housing is also rebounding.
The gains indicate Federal Reserve efforts to thaw credit markets together with the Obama administration’s “cash-for- clunkers” program and tax credits for first-time homebuyers are reviving demand. Factories and builders, which have accounted for half of all the jobs lost since the recession began in December 2007, may keep growing in coming months as sales rise.
“Things are stabilizing and we are probably heading higher from here,” said Jonathan Basile, an economist at Credit Suisse in New York. “And this is all happening without the major part of the stimulus reaching the economy yet.”
The Tempe, Arizona-based purchasing managers’ factory report is due at 10 a.m. New York time. Estimates in the Bloomberg survey ranged from 49 to 53.5. The projected August reading would be the highest since January 2008.
A report from the National Association of Realtors at the same time may show pending sales of existing houses increased 1.6 percent in July, according to the Bloomberg survey median. It would be a sixth consecutive advance, marking the longest stretch of gains since records began in 2001.
Construction
Also at 10 a.m., the Commerce Department may report that construction spending was little changed in July, held back by declines in work on commercial and multifamily-residential projects, such as apartment buildings.
Reports last month indicated manufacturing, which accounts for about 12 percent of the world’s largest economy, was strengthening. The Institute for Supply Management-Chicago Inc.’s business barometer rose more than forecast in August and measures from the Fed Banks of Philadelphia and New York showed those regions expanded.
Also today, industry figures may show sales of cars and light trucks climbed to a 13.3 million annual pace in August, the most since August 2008, according to economists surveyed by Bloomberg.
Ford Motor Co, General Motors Co. and Honda Motor Co. were among automakers citing the popularity of the federal cash-for- clunkers plan in announcing production increases for the coming months.
Clunkers
The program, which ended Aug. 24, offered auto buyers discounts of as much as $4,500 to trade in older cars and trucks for new, more fuel-efficient vehicles. The program produced almost 700,000 auto sales before it ended, the Transportation Department said Aug. 26.
Ford, the second-largest U.S. automaker, posted its first monthly U.S. sales gain in July since 2007.
“We had a solid July sales month and we are headed toward an even stronger August,” Ford marketing chief Ken Czubay said last week in a statement.
GM last month called back 1,350 union workers, its biggest one-time increase in jobs since 2006, as it boosted second-half production, in part because of “cash for clunkers.”
Smaller stockpiles are also contributing to a rebound in output as orders rise to stock bare shelves. Inventories dropped at a record $159.2 billion annual rate in the second quarter, the Commerce Department said last week. They fell at a $113.9 billion pace in the first three months of the year.
More Sales
Intel Corp., the world’s biggest chipmaker, is among companies benefiting as customers increase inventories back to more normal levels. The Santa Clara, California-based company last week increased its sales forecast for this quarter.
Intel joined computer-industry companies including Dell Inc. and Hewlett-Packard Co. in predicting a recovery, and has credited consumers in Asia for a rebound in orders for personal computers.
U.S. exports in May and June showed the biggest two-month gain in almost a year, signaling the worst global recession since World War II was easing.
The Standard & Poor’s 500 Index was been up for six consecutive months on growing optimism that the worldwide economic slump was abating. The index ended the month yesterday on a down note on concern the rally has outpaced the outlook for profits.
Bloomberg Survey
===============================================================
ISM Construct Pending
Manu Spending Homes
Index MOM% MOM%
===============================================================
Date of Release 09/01 09/01 09/01
Observation Period Aug. July July
---------------------------------------------------------------
Median 50.5 0.0% 1.6%
Average 50.7 -0.1% 1.6%
High Forecast 53.5 0.6% 5.0%
Low Forecast 49.0 -0.8% -1.0%
Number of Participants 74 49 34
Previous 48.9 0.3% 3.6%
---------------------------------------------------------------
4CAST Ltd. 51.0 0.6% 3.0%
Action Economics 50.0 -0.6% -1.0%
AIG Investments 51.0 0.5% 0.5%
Aletti Gestielle SGR 50.0 --- ---
Ameriprise Financial Inc 51.0 -0.1% 1.3%
Argus Research Corp. 50.2 0.2% ---
Bank of Tokyo- Mitsubishi 52.8 -0.8% ---
Bantleon Bank AG 51.0 --- ---
Barclays Capital 53.0 0.0% -1.0%
Bayerische Landesbank 50.5 --- ---
BBVA 52.1 0.1% 1.5%
BMO Capital Markets 50.7 0.0% 1.5%
BNP Paribas 51.0 -0.3% ---
Briefing.com 49.7 -0.3% ---
Calyon 50.5 --- ---
Capital Economics 53.0 0.5% 2.5%
CIBC World Markets 52.0 0.1% ---
ClearView Economics 50.5 -0.3% 4.0%
Commerzbank AG 51.0 --- 2.0%
Credit Suisse 50.5 0.3% ---
Daiwa Securities America 50.0 0.0% ---
Danske Bank 51.0 --- ---
DekaBank 50.5 0.3% 1.0%
Desjardins Group 50.5 0.0% ---
Deutsche Bank Securities 52.0 0.2% 2.0%
Deutsche Postbank AG 50.0 --- ---
DZ Bank 50.5 --- 2.5%
First Trust Advisors 53.5 0.0% ---
Fortis 51.0 --- 1.5%
Goldman, Sachs & Co. 51.0 0.5% ---
Helaba 50.5 --- ---
Herrmann Forecasting 51.7 -0.3% 2.3%
High Frequency Economics 51.0 -0.5% 3.0%
HSBC Markets 51.0 0.1% 1.5%
IDEAglobal 51.0 -0.3% 1.0%
IHS Global Insight 51.0 0.5% ---
Informa Global Markets 50.0 -0.5% -1.0%
ING Financial Markets 51.5 -0.7% 2.0%
Insight Economics 51.0 0.2% 3.0%
Intesa-SanPaulo 50.5 0.2% ---
J.P. Morgan Chase 51.0 0.3% 2.0%
Janney Montgomery Scott L 51.5 0.3% 2.1%
Johnson Illington Advisor 50.0 --- ---
Landesbank Berlin 50.5 -0.3% ---
Landesbank BW 50.5 -0.5% ---
Merrill Lynch/BAS 52.0 -0.8% ---
MFC Global Investment Man 50.5 -0.4% ---
Moody’s Economy.com 50.3 0.1% 0.5%
Morgan Keegan & Co. --- -0.7% ---
Morgan Stanley & Co. 51.0 -0.5% ---
National Bank Financial 51.0 --- ---
Natixis 50.0 --- ---
Newedge 50.5 --- ---
Nomura Securities Intl. 49.8 --- ---
Nord/LB 51.0 --- ---
PNC Bank 50.5 -0.5% ---
Raymond James 50.2 0.3% ---
RBC Capital Markets 50.7 --- 1.6%
RBS Securities Inc. 50.5 --- ---
Ried, Thunberg & Co. 49.0 0.1% 1.0%
Schneider Foreign Exchang 49.0 --- 1.9%
Scotia Capital 51.0 --- ---
Societe Generale 52.0 --- ---
Standard Chartered 50.1 --- 2.0%
Stone & McCarthy Research 50.1 0.0% ---
TD Securities 51.0 --- 2.0%
UBS 50.5 0.5% ---
UniCredit Research 50.0 --- ---
Union Investment 51.0 --- ---
University of Maryland 50.2 -0.1% 0.0%
Wells Fargo & Co. 50.1 -0.8% ---
WestLB AG 50.1 -0.2% 1.5%
Westpac Banking Co. 50.0 0.5% 5.0%
Woodley Park Research 49.1 -0.2% 0.6%
Wrightson Associates 49.0 --- 1.0%
===============================================================
To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net.
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