AP reported that manufacturing grew a little slower in August 2011 than the previous month, but didn't contract as some economists had feared. The 25th straight month of growth was a hopeful sign that US factories weathered a difficult summer for the economy.

The Institute for Supply Management said that its manufacturing index slipped to 50.6 in August 2011, down slightly from a reading of 50.9. Any reading above 50 indicates expansion. Stocks rose after the report was released. Investors were expecting the index to come in under 50 for the first time since July 2009, one month after the recession ended. An index number under 50 indicates the sector is contracting.

A second report showed that construction spending fell by the largest amount in six months in July, with sharp reductions in spending on government projects.

The Commerce Department said that construction spending fell 1.3% to a seasonally adjusted annual rate of USD 789.5 billion. That is 3.5% above an 11 year low hit in March but it is still only about half the USD 1.5 trillion that economists view as a healthy level for construction. Economists believe it could take four years before construction activity returns to more normal levels.

The weakness in July reflected a 2.1% drop in spending on government building projects, which fell to the slowest pace since late 2006. Spending on residential construction was down 1.4%.

(Sourced from Associated Press)