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U.S. manufacturing contraction slowest since August

NEW YORK — A private-sector measure of U.S. manufacturing activity declined last month at the slowest pace since August. Production jumped to its highest level in more than two years as manufacturers worked to restock customers' bare shelves, another sign that the recession may soon be over.

The Institute for Supply Management, a trade group of purchasing executives, said Monday that its manufacturing index read 48.9, up from 44.8 in June. That's better than the 46.2 reading analysts polled by Thomson Reuters expected.

"If we stay on trend ... we would expect to be above 50 next month," said Norbert Ore, chair of ISM's manufacturing survey committee. A reading above that threshold would indicate growth in manufacturing, something that hasn't happened since January 2008.

The pace of decline has been slowing since the index hit a 28-year low of 32.9 in December. And it was the third straight monthly reading above 41.2, which tends to indicate expansion in the overall economy if sustained at such levels, according to the ISM.

The moderating decline in U.S. manufacturing mirrors improvements in the industrial sectors in China, Britain and Europe.

In July, new orders and production hit their highest levels since the summer of 2007, while new export orders tipped into growth territory after shrinking for nine months.

The manufacturing index is based on a survey of the Tempe, Ariz.-based group's members.