The dollar recovered from a five week low against the euro as a minor slowdown in American manufacturing was not enough to derail the second quarter economic recovery theme.
The Institute for Supply Management said its purchasing manager’s index was 55.3 in June, barely changed from May's 55.4, though less than the 55.8 forecast in the Reuters poll of economists.
Component indexes were mixed: production slipped to 60.0 from 61.0; new orders rose to 58.9 from 56.9, a six month high; inventory was unchanged at 53.0 as was unemployment at 52.8; export orders fell to 54.5 from 56.5 and imports climbed to 57.0 from 54.5.
Readings above 50 indicate expansion.
For the first 30 minutes traders seemed uncertain how to read the report. The euro was at 1.3686 just before 10:00 am release. It raced to 1.3702 in the first two minutes, dropped to 1.3688 in another two minutes, came back to 1.3692, fell to the 1.3679 at 10:13 am and then began a comparatively gradual ascent back to 1.3690 at 10:30 am, finally followed by a gradual slide to 1.3676.
The U.S. economy contracted at a 2.9 % annul apace in the first quarter. Analysts in general blamed the winter weather for inhibiting economic activity and most had predicted resurgence in the spring quarter which ended yesterday.
The ISM is the latest statistic indicating that the recovery may be weaker than hoped. Many economists have since revised growth expectations down for the second quarter following May's weak retail sales. Consumer spending accounts for about 70% of U.S. GDP.
At the last FOMC meeting the Federal Reserve cut it 2014 GDP projection to 2.1% to 2.3% from 2.8% to 3.0%.
On balance the report seemed to confirm the continued slow expansion of the U.S. economy, a view bolstered by strength in orders, production and status quo employment figure.
In a separate report from the Commerce Department, construction spending rose 0.1 % in May, far less than the 0.5% forecast. But the disappointment was balanced by a strong revision to April's result to 0.8% from 0.2%.
Private construction spending declined 0.3 % while there was a 1.0 percent rise in public construction outlays. Private construction is the largest portion of overall construction expenditures.
Construction of private residences slipped 1.5 percent, reflecting weak housing starts.
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