Elsewhere, manufacturing is showing signs of stabilizing. U.K. manufacturing growth accelerated more than economists forecast in July, adding to evidence Britain’s recovery is gathering pace and strengthening the case for the Bank of England to keep stimulus paused.
A factory gauge rose to 54.6 in July from 52.9 in June, the highest in 28 months, Markit Economics and the Chartered Institute of Purchasing and Supply said today in London. That’s above the 50 level indicating expansion. That momentum was echoed in the euro area, where survey manufacturing grew more than initially estimated, while China’s official factory index also showed expansion.
Manufacturing is finding support from the housing market as sales of new homes rose to the highest level in five years in June. The housing recovery has spurred demand for the appliances and furniture needed to fill them, giving companies such as Armstrong World Industries Inc. a reason to start their own construction.
The Lancaster, Pennsylvania-based manufacturer of flooring, ceiling and cabinets is planning to build a $40 million North American plant later this year to produce luxury vinyl tile.
“Given current and projected volumes, manufacturing in the U.S. is now a financially attractive option,” Matthew Espe, Armstrong’s chief executive officer, said in a July 29 conference call. “Local production and the elimination of freight and duty expense will drive lower cost, reduce inventories and provide better customer service and lead times. This is an exciting product category for us and an appealing investment in financial terms as well.”
The report corroborates regional surveys that showed manufacturing in the New York and Philadelphia regions expanded more than forecast in July.
Another gauge of manufacturing yesterday also indicated sustained growth. The MNI Chicago Report’s business barometer increased to 52.3 from 51.6 in June. A reading above 50 signals expansion.