Mixed Reports Point to Hesitant Growth : Economy: Manufacturing sector contracts, while construction activity jumps, spurred largely by public spending.

The nation’s economic recovery continues to advance by fits and starts, as manufacturing lost ground in July while construction spending posted the biggest increase of the year in June.

The nation’s manufacturing sector declined in July for the third time in the past four months, suggesting that relief from the economic doldrums is not coming any time soon, a widely watched survey of corporate purchasing executives said Monday.

However, the Commerce Department reported that spending on construction projects jumped 1.2% in June, the best showing this year, but analysts said the all-important residential sector was still not responding as it should to the lowest interest rates in two decades.

The National Assn. of Purchasing Management said its purchasing managers’ index rose to 49.5% in July from 48.3% in June.

But the index remained below 50%, which generally indicates the manufacturing sector is contracting.

The index, which measures the manufacturing economy through a survey of purchasing managers at 300 companies in 20 industries, stood at 51.1% in May and 49.7% in April.

A reading above 44.5% over time generally indicates the economy as a whole is growing. The index has averaged 52.3% so far this year.

“In general, what it says is that the overall economy is growing at a very slow pace, something below last year’s overall growth,” said Robert J. Bretz, chairman of the association’s business survey committee and director of corporate purchasing at Pitney Bowes Inc. in Stamford, Conn.

That is not particularly bright news, he said, since for many Americans 1992 was a difficult year.

The National Assn. of Purchasing Management’s purchasing managers’ index is regarded as a good gauge of future economic activity because the managers who are polled are responsible for buying the raw materials that fuel the nation’s factories.

Meanwhile, the Commerce Department report showed that spending on all types of construction rose to a seasonally adjusted annual rate of $460.1 billion, an increase of $5.5 billion over the May level.

The advance was led by the biggest increase in government spending in more than a year, a gain of 3.6%. That reflected a huge 9.3% rise in outlays for highways and streets.

Private construction was up as well, reflecting strength in the residential sector, but by a much more modest 0.3%.

The overall increase was the biggest since a 1.3% rise last December. Spending rose 1.1% in May after posting two months of weak showings.

Separately, an analysis released by the Conference Board shows that only the Mountain, Midwest and Southern regions of the country have truly recovered from the recession.

The Board’s latest quarterly analysis showed that since the 1991 national economic recovery began, regional economies have performed differently.

The Mountain, West North Central and three Southern regions have not only recovered, most have far exceeded their pre-recession peaks, the board said.

Those areas tend to be lower-cost areas, where manufacturing jobs are growing despite the national decline. However, other regional economies--in particular the Middle Atlantic, New England and Pacific regions--remain in a slump, it said.

In the Northeast and on the West Coast, business and population migration trends--from California to the Mountain region and from the Northeast to the Southeast--are a major force shifting economic activity and growth, it added.

The Conference Board bases its findings on its newly developed Regional Performance Indexes.