INSTANT VIEW: Manufacturing sector picks up in June

NEW YORK (Reuters) - The pace of growth in the manufacturing sector picked up for the first time in four months in June, a sign of optimism for the sputtering economy, according to an industry report released on Friday.

U.S. consumer sentiment worsened in June on jitters about the economic outlook and spending is likely to remain lackluster in the long-term, a survey released on Friday showed.

COMMENTS:

TIM GHRISKEY, CHIEF INVESTMENT OFFICER, SOLARIS ASSET MANAGEMENT, BEDFORD HILLS, NEW YORK:

"The first thing we all said here was the expectations probably had been lowered for ISM manufacturing over the past couple of months, and that set up for a number that could be beat.

"It does appear there is some acceleration here in the manufacturing side, and that's good news because really the analysis of the mid-cycle slowdown we were experiencing was on the manufacturing side and related to the events in Japan and perhaps some reduced demand out of China. So if we did go through a mid-cycle slowdown it (may have been) a very brief slowdown, but I think it's too early to make that claim based on this number."

ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS, NEW YORK

ISM: "It's too soon to say whether the soft patch is over. We had such a big drop last month. We are just seeing some of the retracement. This takes some of the sting out of last month's drop. One number doesn't dispel your doubt. In May, we shifted gear and we shifted down.

"We need to see more of this to signal that the soft patch is over."

THOMSON REUTERS/UNIVERSITY OF MICHIGAN SURVEYS OF CONSUMERS: "Consumer sentiment is under a lot of pressure. You have to bring the consumers along...you need to bring them along with jobs. The Fed is pretty much tapped out. You are not going to see a QE3 until the economy is in really tough shape."

MICHAEL GAPEN, CHIEF U.S. ECONOMIST, BARCLAYS CAPITAL, NEW YORK

"We think it is reflective of a rebound in the manufacturing sector. The number is above expectations, higher than it was in May. If you look at the subcomponents, the main increase came in inventory, which suggests that firms think demand will rebound. Production still looks good, new orders still look good. It looks like there was a temporary slowdown, perhaps due to supply disruptions in Japan.

"It's a June number so it indicates perhaps the biggest weakness will be in May. It sets the groundwork for acceleration in growth for the second half of the year."

JOE MANIMBO, MARKET ANALYST, TRAVELEX GLOBAL BUSINESS PAYMENTS IN WASHINGTON

"The data, being better than expected, is consistent with the Fed's view that the slowdown won't last. That's certainly encouraging news and as a result, we have seen the dollar push broadly higher. Given the rally that we have seen in some of those high-flying assets this week, investors are likely booking some profits as they head into the long holiday weekend."

DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY AT CRT CAPITAL

GROUP, STAMFORD, CONNECTICUT

"A big gain to ISM, beyond expectations, with employment up too. Prices paid have dropped. Inventories were the big contributor, which detracts somewhat from the overall strength here given the outpeformance versus new orders. The details are not as robust as the headline as that inventory gain was the bulk of the overall increase.

"The market is off with 5s underperforming, though no drama in the price action at all. Note that 2s/5s/10s surpassed our big target of -9.8 bp and so we're watching the close here as this break looks to be a go-with.

"It's an afterthought but U Mich was a tad softer on the revision despite the downtick in inflation expectations (due to gas prices) as you would have thought the lower gas prices would improve confidence. So this challenges the notion that lower gas prices will inspire the consumer."

ROBERT BRUSCA, CHIEF ECONOMIST, FACT AND OPINION ECONOMICS, NEW YORK

"It's too soon to say whether the soft patch is over. We had such a big drop last month. We are just seeing some of the retracement. This takes some of the sting out of last month's drop."

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK

"It's not bad news, but it's odd in that virtually the entire increase was driven by a rise inventories. The absence of strength in new orders does not promote confidence.

"There's no outright bad news here. Employment got firmer and that's encouraging. The report indicates that the weakness that showed up in the Empire State and Philadelphia Fed surveys was purely regional.

"The Fed can breathe a sigh of relief, but there's still reason for nervousness on the outlook."