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Economy

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Builders boost housing spending, cut elsewhere
U.S. builders spent more to construct homes in August, further evidence of a housing rebound. Still, the increase couldn’t offset cuts in public projects and commercial real estate.
Overall construction spending dipped 0.7 percent in August from July, the Commerce Department reported Monday. It was the second straight monthly decline.
The decline lowered construction spending to a seasonally adjusted annual rate of $834.4 billion. That’s nearly 12 percent above a 12-year low hit in February 2011 and roughly half of what’s considered healthy.
Spending on residential projects rose 0.9 percent in August. That pushed residential spending to a seasonally adjusted annual rate of $273.5 billion, nearly 18 percent above the level from a year ago.
Spending on single-family homes increased in August for the fifth straight month, while apartment construction spending rose for the 10th month in a row.
– Associated Press

Manufacturing sector reawakens

Index rises for 1st time in 4 months

– U.S. manufacturing grew for the first time in four months, buoyed by a jump in new orders and more jobs. The increase is a hopeful sign that the economy may be improving after a weak stretch.

The Institute for Supply Management, a trade group of purchasing managers, said Monday that its index of factory activity rose to 51.5. That’s up from 49.6 in August.

A reading above 50 signals growth and below indicates contraction. The index had been below that threshold from June through August.

Most economists were encouraged by the report after weak consumer spending and fewer exports slowed factory production in the spring. Still, they cautioned that economic growth is likely to stay modest until hiring accelerates and consumers spend more.

The reading “will boost hopes that some of the recent slowdown in economic growth was just a summer phenomenon,” Paul Dales, an economist at Capital Economics, said in a note to clients.

Investors, nonetheless, appeared pleased. Stocks increased their gains after the report was released. The Dow Jones industrial average had been up nearly 100 points before the report came out. It jumped to 150 points up within 10 minutes of the release.

Separately, the government said U.S. builders spent more on home construction in August, adding to evidence that housing is recovering.

Overall construction spending dipped 0.7 percent, the Commerce Department said, as spending on commercial projects such as office buildings and shopping centers fell.

In the manufacturing survey, a measure of new orders jumped to 52.3, the highest reading since May. That suggests production will increase in coming months.

And a gauge of employment rose, a sign that manufacturers may report a gain in jobs when September’s employment report is released Friday. Manufacturers shed workers in August.

Manufacturers also said they are facing rising costs for corn, fuel and several other commodities.

The improvement at U.S. factories comes even as growth is slowing overseas. Europe’s financial crisis has pushed many countries in the region into recession. Growth in emerging nations such as China and India has slowed.

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