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US Manufacturing Growth Picks Up; Construction Spending Rises

In a good sign for the economy, a new report showed that the pace of growth in the U.S. manufacturing sector picked up in January while a separate report showed that construction spending rose last month.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 53.1 from 50.2 in December, beating economists' expectations of 50.6. A reading above 50 indicates expansion in the manufacturing sector.

It was the highest level since April of last year. A source of strength for the economy in the early years of the recovery, the manufacturing sector lost some steam in the second half of last year and contracted in November in the wake of superstorm Sandy.

The new orders index expanded to 53.3 from 49.7, while the employment gauge gained to 54 from 51.9.

Construction Spending Increases

A separate report showed that U.S. construction spending rose in December, with strong gains in home building and business investment outweighing a sharp drop in public works spending by state and local governments.

(Click here to track the U.S. stock market following the reports.)

Daniel Acker | Bloomberg | Getty Images

Construction spending increased 0.9 percent to an annual rate of $885 billion, the Commerce Department said on Friday. Analysts polled by Reuters had expected a 0.6 percent gain.

The data showed America's private sector picking up the slack from a shift toward government austerity.

Spending on private residential projects increased 2.2 percent in December, a reflection of the country's improving housing market that is expected to help economic growth this year.

Public sector construction spending fell 1.4 percent to an annual rate of $270 billion, the lowest level since November 2006.

State and local spending dropped by 1.7 percent, while outlays on federal government projects — a relatively small component of overall construction spending — rose 1.3 percent.

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