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Manufacturing sector grows slightly in Aug.

Struggling hard to stay ahead, the U.S. manufacturing sector continued to grow in August, but at a persistently sluggish pace, and remained unchanged from July's subdued pace, according to a canvass of the nation's purchasing managers.

But even the muted pace of growth suggests that the manufacturing economy is still picking up steam and that business spending, a major component of economic growth, could show signs of improvement later this year.

The purchasing managers, who control the purse strings for the nation's business spending, said manufacturing grew in August for a seventh straight month of expansion following a long slump which began last year. But the pace of growth has cooled off somewhat in the past two months, and the purchasing managers' monthly index was unchanged in August at a level of 50.5. A reading over 50 indicates growth, while anything under 50 points to a decline.

While the manufacturing sector is still growing, the rate of growth has decelerated, and the August reading of 50.5 is below the 56.2 reading put up in June.

"Putting the year in perspective, we now have seven consecutive months of modest growth," said Norbert Ore, who heads up the Institute for Supply Management's business survey committee. The August reading, said Ore, "indicates that manufacturing improved when compared to July."

But striking a cautious note, he added, "New orders softened and are a cause for concern as we look at the balance of the year. At the current level of growth in the overall economy, many manufacturers find themselves anxious about second-half sales."

In its monthly gauge of manufacturing activity, the trade group reported, "Comments from purchasing and supply executives reflect soft demand and very competitive markets. While some indicate that business is improving, they lack confidence when forecasting the months ahead. Declines in consumer and business confidence are major themes."

Of the 20 industries that make up the manufacturing sector, only eight reported growth. And significantly, for the first time in months, textiles was not among them. In recent months, textiles had been among the strongest industry sectors measured.

During August, production continued to grow despite a decline in new orders and a shrinking order backlog, the monthly report showed. The Production Index remained sturdy at a reading of 55.6, slipping only slightly from the 55.7 recorded in July. But after eight straight months of growth, the New Orders Index fell in August to 49.7 down from the 50.4 reading of July. Order backlogs fell as well, to a level of 45.0 from 45.5 the preceding month.

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