Factory, Building Sectors Post Gains

Growth for U.S. manufacturers remained strong in April and factories hired more workers, even though an important measure of prices for materials hit a near-25-year high, a survey released Monday said. A separate report found U.S. construction surged to a record high in March.

Growth in manufacturing hiring combined with rising prices for materials, both raw and finished, bolsters views that the Federal Reserve will begin raising interest rates from their 46-year low of 1% sooner rather than later. The Fed meets today.

The Institute for Supply Management said its manufacturing index edged down to 62.4 in April from March’s 62.5. Economists had forecast a rise to 63.

A reading above 50 shows expansion. It was the 11th consecutive month of expansion in the manufacturing sector, which accounts for less than a fifth of the U.S. economy. In January, the index stood at a two-decade high at 63.6.

The head of the ISM’s factory survey, Norbert Ore, noted that order backlogs are growing for the first time in several years, but that prices also were rising.

Ore also said firms appeared more willing to add employees instead of holding back to see whether economy was growing.

Tempe, Ariz.-based ISM said the employment component of the index rose for a sixth consecutive month, to 57.8 from 57 in March. The employment index remains at its highest level since December 1987, ISM data show.

ISM said its prices-paid component rose to 88 in April -- the highest level since November 1979 -- from 86 in March.

“The interesting part is that on the manufacturing side, you see the prices paid going up, but you don’t see that so much on the services side. It’s not being passed on so much to consumers yet,” said Elizabeth Denison, senior economist at Dresdner Kleinwort Wasserstein in New York.

Separately, the Commerce Department found construction spending hit a record high in March, surging 1.5%, compared with a 0.4% increase in February. Economists had forecast a rise of 0.5%.