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US Manufacturing Expands, Construction Spending Up

Employee Thomas Rutkowski operates a manual lathe machine at the Ellicott Dredges LLC manufacturing facility in Baltimore, Maryland, U.S.
Andrew Harrer | Bloomberg | Getty Images
Employee Thomas Rutkowski operates a manual lathe machine at the Ellicott Dredges LLC manufacturing facility in Baltimore, Maryland, U.S.

U.S. manufacturing activity grew in June behind a pickup in new orders and stronger production while a separate report showed that spending on residential housing rose in May to the highest level in 4 1/2 years.

The increase in manufacturing suggests factories could help the economy in the second half of the year.

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

The Institute for Supply Management said its index of factory activity increased to 50.9 in June, up from 49 in the previous month. May's reading was the lowest in four years. A reading above 50 suggests growth, while those below indicate contraction.

One negative in the June survey: Factories cut jobs last month.

Manufacturing has slowed this year after providing crucial support to the economy for the first three years after recession ended in June 2009. Europe's slump has weighed heavily on U.S. exports. And businesses cut back on their investment in machinery and equipment in the first quarter.

Construction Spending Rises

Spending on residential housing rose in May to the highest level in 4 1/2 years, helping to send overall construction spending higher despite a big drop in nonresidential activity.

The Commerce Department said construction spending rose 0.5 percent in May compared with April when spending was up 0.1 percent. Private residential construction rose 1.2 percent to the highest level since October 2008, further evidence of a rebound in housing.

Spending on nonresidential projects fell 1.4 percent, dragged lower by declines in office building and the category that includes shopping centers.

Public construction rose 1.8 percent with state and local activity up 1.6 percent and federal spending rising 0.6 percent.

Total construction rose to a seasonally adjusted annual rate of $874.9 billion in May, 5.4 percent higher than a year ago.


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