Manufacturing sector falls; weak dollar aids exports

0 Comments | USA TODAY, June, 2008 | by John Waggoner

The economy in recent months was in slightly better shape than economists predicted, data released Monday show, casting further doubt on whether the Federal Reserve will cut interest rates later this month.

The Institute for Supply Management's purchasing managers index that tracks manufacturing rose a point in May to 49.6. But the index is still below 50, indicating a contracting manufacturing sector. The index has been below 50 for four months.

Export orders jumped two points, to 59.5, one of the few bright spots in the ISM report. The falling dollar has given exports a big boost: Goods made in the USA are cheaper abroad when the dollar falls.

How much is the weak dollar helping? "A bunch," says Norbert Ore, chairman of the ISM manufacturing...