Manufacturing in U.S. Probably Grew for First Time in 19 Months

Manufacturing in the U.S. probably expanded in August for the first time in 19 months, helping lead the economy out of the worst recession since the 1930s.

The Institute for Supply Management’s factory gauge increased to 50.5 from 48.9 in July, according to the median of 74 forecasts in a Bloomberg News survey. Fifty is the dividing line between expansion and contraction. Other reports may show housing is also rebounding.

The gains indicate Federal Reserve efforts to thaw credit markets together with the Obama administration’s “cash-for- clunkers” program and tax credits for first-time homebuyers are reviving demand. Factories and builders, which have accounted for half of all the jobs lost since the recession began in December 2007, may keep growing in coming months as sales rise.

“Things are stabilizing and we are probably heading higher from here,” said Jonathan Basile, an economist at Credit Suisse in New York. “And this is all happening without the major part of the stimulus reaching the economy yet.”

The Tempe, Arizona-based purchasing managers’ factory report is due at 10 a.m. New York time. Estimates in the Bloomberg survey ranged from 49 to 53.5. The projected August reading would be the highest since January 2008.

A report from the National Association of Realtors at the same time may show pending sales of existing houses increased 1.6 percent in July, according to the Bloomberg survey median. It would be a sixth consecutive advance, marking the longest stretch of gains since records began in 2001.