US manufacturing unexpectedly grew in August and fewer Americans filed new claims for jobless aid last week despite a slump in confidence that threatened to push the economy back into recession. The Institute for Supply Management's index of national factory activity edged down to 50.6 from 50.9 in July, confounding economists' expectations of a fall to 48.5.
A reading below 50 indicates a contraction in the nation's factory sector. Initial claims for state unemployment benefits dropped 12,000 to a 409,000, a separate report from the Labour Department showed. The drop in claims offered no sign layoffs have picked up due to slumping business and consumer confidence following a steep plunge in the stock market last month and Standard & Poor's decision to strip the nation of its AAA credit rating. But claims are still above the 400,000 usually associated with a stable labour market and key details of the ISM survey, including production, new orders and employment, were weak.