US manufacturing up but consumers remain wary

US manufacturing growth picked up in June, a national index has shown, in a second day of positive data that points towards an end to the soft patch that has dogged the economy in recent months.

A separate survey of consumer confidence showed it edged up in June, as fuel prices fell and eased the burden on household spending, but showed people still harboured serious concerns over the outlook in future months

The Institute for Supply Management said its index of national factory activity rose to 55.3 from 53.5 the month before.

The reading was higher than economists’ expectations for 51.8, according to a Reuters poll, but analysts said the new orders index rose less than the headline figure, to 51.6 from 51.0, showing signs of weakness remained.

Many economists and the Federal Reserve, which ended its latest round of monetary stimulus yesterday as the second quarter ended, have maintained the obstacles to growth in the first six months of the year were temporary.

"It indicates perhaps the biggest weakness will be in May," said Michael Gapen, chief U.S. economist at Barclays Capital in New York. "It sets the groundwork for acceleration in growth for the second half of the year."

U.S. stocks added to gains immediately following the data, while Treasury prices turned negative and the dollar extended gains against the yen.

But the Thomson Reuters/University of Michigan consumer sentiment index came in at 71.5, down from 74.3 the month before. It was slightly lower than the preliminary June figure of 71.8 and shy of the median forecast for 71.9.

The survey's barometer of current economic conditions rose to 82.0 from 81.9 in May but the gauge of consumer expectations fell to 64.8 from 69.5 and below forecasts for 66.6.