Manufacturing index unexpectedly dips in June

An index of manufacturing activity unexpectedly fell slightly last month as production dipped.

A closely watched index of factory activity slipped to 55.3 from 55.4 the previous month, the Institute for Supply Management said. Economists expected an increase to 55.8.

Still, manufacturing expanded for the 13th straight month, though the pace of growth slowed.A reading above 50 indicates the sector is expanding.

A measure of production slipped to 60 from 61. But the orders index, a barometer of future production -- increased to 58.9 from 56.9. The employment index was unchanged at 52.8.

The industrial sector has been a bright spot in a mixed economy. Consumer spending has slowed recently while home sales have perked up after slowing during the extreme winter weather. The government said last week the economy shrank 2.9% in the first quarter, its worst showing since the Great Recession was winding down five years ago.

But production at the nation's factories generally has held up surprisingly well, even during the harsh weather, due in part to the housing recovery, consumer auto purchases, the oil and natural gas boom and increased business investment.

"We think that the manufacturing sector will be an important driver of growth in 2014 and 2015 as the capital spending cycle firms and we judge the strength of the ISM to be consistent with this thesis," RDQ Economics said in a research note.