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An ironworker walks a beam on a new courthouse in Philadelphia. Construction spending fell in November.

Manufacturing rises slightly in December

Associated Press photos
An employee works on an assembly line at Generac Power Systems in Whitewater, Wis., part of a manufacturing industry that grew slowly last month.

– U.S. manufacturing grew slightly last month and factory hiring increased. The modest gain suggests the economy entered the new year with some momentum.

The Institute for Supply Management said Wednesday that its index of manufacturing activity rose in December to 50.7. That’s up from a reading of 49.5 in November, which was the lowest reading since July 2009, one month after the recession ended.

A reading above 50 indicates growth, while a reading below signals contraction. The ISM is a trade group of purchasing managers.

A measure of employment increased last month to 52.7. That’s up from 48.4 in November, which was the first time the employment gauge fell below 50 in three years.

Factories have cut jobs in three of the four months through November, according to government data. The jump in employment in the ISM survey suggests manufacturers may have stepped up hiring last month. The Labor Department releases the December jobs report Friday.

Still, a gauge of new orders was unchanged and production grew more slowly, the survey found. Manufacturers also cut back on stockpiles, a sign of concern about future demand.

“The trend in manufacturing remains weak,” said Jim O’Sullivan, an economist at High Frequency Economics, in a note to clients.

The closely watched manufacturing survey was done before Congress reached a deal this week to avoid the tax increases that were part of what came to be known as the fiscal cliff.

A survey in China on Monday found manufacturing activity in that country expanded for the third straight month. That adds to evidence that its economy is improving after a slowdown last year.

Growth in the U.S. economy is being driven by other sectors, such as housing. A government report showed that construction firms spent more on home building in November.

Overall construction spending slipped 0.3 percent because of a sharp drop in federal government projects. Spending on commercial buildings also fell.

There have been some positive signs for factory output. In November, companies substantially increased their orders for a category of large equipment that reflects their investment plans. That followed a big increase in the same category in October.

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