Latest factory, construction data points to recovery

The Institute for Supply Management's manufacturing index revealed an improving manufacturing sector in July, while the U.S. Commerce Department announced that construction spending rose on signs of housing sector stabilization in June.

The ISM manufacturing index rose to 48.9 percent in July from 44.8 in June -- the index's seventh consecutive monthly increase. Economists surveyed by Bloomberg News had expected the index to total 46.5 in July. The index totaled 42.8 in May. It hit a low of 32.9 in December 2008.




Readings above 50 indicate an expansion; under 50, a contraction. The ISM index has been below 50 for about 2 years.

Also, the new orders index, a measure of future demand, increased to 55.3 in July from 49.2 in June; the production index rose to 57.9 percent from 52.5 percent in June; the employment index increased to 45.6 percent from 40.7 percent in June.

Meanwhile, construction spending rose 0.3 percent in June to $965.7 billion, the Commerce Department announced, as spending on housing and public works projects increased. However, construction spending is still down 10.2 percent compared to a year ago -- a reading that underscores both the depth and length of the U.S. recession.

Economists surveyed by Bloomberg News had expected June construction spending to decline 0.5 percent. Construction spending decreased a revised 0.8 percent in May and rose 0.6 percent in April.

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