The manufacturing sector in US islikely stalled for a second straight month in August as the persistent housing slump and tight credit conditions crimped the overall business climate.
However, strong overseas demand thanks largely to a weak dollar has been a bright spot for exporters, analysts said.
The Institute for Supply Management's widely followed index on national factory activity likely held at 50.0 in August, unchanged from July, according to analysts polled by Reuters.
A reading at 50 shows neither expansion nor contraction in the sector.
Among the 67 analysts surveyed, the forecasts on the August ISM reading ranged from 47.8 to 52.0.
Some regional factory data suggested an improvement in new orders and shipments. A decline in input costs especially in oil also helped the business outlook among manufacturers.
On Friday, the Institute for Supply Management-Chicago said its barometer on Midwest business activity rose to 57.9 in August from 50.8 in July, surpassing the 50.0 expected by analysts.
But other regional business readings were less ebullient.
ISM-Milwaukee said on Friday activity in the Milwaukee, Wisconsin region contracted for a sixth straight month in August, while the National Association of Purchasing Management-New York's index on business conditions in New York City fell to 409.5 in August from 411.8 in July.
Here is a selection of comments from economists:
BANC OF AMERICA SECURITIES
Forecast: 49.5
"Both ISM survey indicators are expected to show a slight contraction of business activity amid decelerating household spending, softer foreign economic activity, tighter credit conditions, financial stresses and weakening business confidence."
HSBC SECURITIES
Forecast: 50.0
"The August (N.Y. Fed) Empire index rose to 3, up from -5 in July. However, key activity series remain soft, with new orders, shipments, and employment all in negative territory. The Philadelphia Fed rose to -12 from -16, with new orders staying at -12 and shipments increasing to -3. These readings suggest that manufacturing remains sluggish for a wide range of industries."
LEHMAN BROTHERS
Forecast: 51.0
"The question will be whether the improvement will be broad-based across components, as was the case for the Philadelphia Fed August reading, or concentrated in inventories, as was the case for the Empire State August survey. That said, the sharp improvement in July's employment component is unlikely to be sustained. On the other hand, the reversal in the prices paid component, which dipped to 88.5 after peaking at 91.5 in June, should continue as prices of energy and other commodities retreat."
