Manufacturing activity at 10-month high, construction spending up


Manufacturing in the U.S., seen by many as a major motivator of the recovery, expanded at the fastest rate in nearly half a year in April, growing to a 10-month high.

A monthly index compiled by the Institute for Supply Management showed a 54.8 level, up 1.4 points from March in its 33rd straight month of growth. It’s the largest gain since November’s 1.9-point jump.

The overall economy grew for the 35th straight month, according to ISM. Any reading above 50 shows expansion; below indicates contraction.

Of the 18 industries measured by the ISM, factory activity grew at 16 of the them, including for machinery, paper, transportation equipment, and petroleum and coal.


Surveyed companies said demand was stable to strong, though some said they were worried about high oil prices and questionable European stability.

Another index measuring new manufacturing orders came in at 58.2 – a 3.7-point improvement on March and a 12-month high. Demand for durable goods was up across the board for the first time since December 2010.

A gauge of employment also grew faster, up 1.2 points to a 10-month high of 57.2 in April.

Daniel J. Meckstroth, chief economist with the Manufacturers Alliance for Productivity and Innovation, said that although consumers are “income-constrained and deleveraging,” they need to replace durable goods that are at the end of their shelf life. Demand is particularly high for autos, he said.

“Furthermore, the construction cycle is turning positive and U.S. exports of manufactured goods are globally competitive,” he said in a statement. “Manufacturing is in the sweet spot of current demand.”

The sector, however, won’t be able to keep up with its continued rate of growth, said Meckstroth, who predicted that expansion will continue at a slower speed for the rest of 2012.

A separate report Tuesday from the Commerce Department showed that construction spending in March grew 0.1% from the month before to $808.1 billion. That’s a 6% advance above the March 2011 level of $762.6 billion.


The data, which also shows improvements in private and residential construction, continues a run of housing reports that seem to suggest an improving market.

The positive numbers helped boost the stock market immediately after their release, with the Dow enjoying a 0.7% bounce to 13,308.


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