Manufacturing Expands Unexpectedly

Manufacturing unexpectedly expanded in September after three months of contraction, reflecting stronger orders that ease concern the U.S. economy will slow further.

The Institute for Supply Management’s (ISM) factory index rose to 51.5 last month from 49.6 in August, the Tempe, AZ-based group said today. Readings above 50 show expansion, and the September measure exceeded the most optimistic forecast in a Bloomberg survey.

“Housing is definitely supporting,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “The economy still seems to be expanding, even if modestly, and that should keep overall manufacturing growing.” The median forecast in the Bloomberg survey was 49.7, and estimates from the 76 economists surveyed ranged from 48 to 51.2. A reading above 42.6 generally indicates an expansion in the overall economy, the ISM said. The gauge averaged 55.2 in 2011 and 57.3 a year earlier.