U.S. factories stepped up hiring and production in March, the latest evidence that manufacturing is growing at a healthy pace and fueling the recovery.
But a separate report on construction spending showed that building activity declined in February for the second straight month, disappointing economists.
The reports show “that the economy is still locked on a very gradual healing trajectory,” said Steven Ricchiuto, chief economist at Mizuho Securities.
The Institute for Supply Management, a trade group of purchasing managers, said Monday that its index of manufacturing activity rose to 53.4 in March. That’s up from 52.4 in the previous month. Readings above 50 indicate the sector is expanding.
A measure of manufacturing employment rose to a nine-month high, a sign that factories are hiring more workers. Manufacturers are already a big source of job gains. They’ve added more than 100,000 jobs in the past three months, about one-seventh of all net gains.
Separately, the Commerce Department said construction spending fell 1.1 percent in February, after a fall of 0.8 percent in the previous month. Spending on home building, office construction and government projects all fell.
The weak report shows that the construction industry is still struggling more than two and a half years after the recession ended.
Stocks rose after the reports were issued.
The survey found that the factory growth was widespread. Fifteen of 18 manufacturing industries reported expansion, including mining, steel and other metal production, oil and gas, autos and furniture.
Increasingly confident U.S. consumers and businesses are spending more on cars, machinery and other goods, pushing up factory output. A gauge of production rose to its highest level in three months in March.
Manufacturing has been a key source of economic growth since the recession ended in June 2009. The sector has expanded for 32 straight months, according to the ISM’s index.
Rising factory output is helping the broader economy grow.
Many economists expect growth will slow from the fourth quarter’s 3 percent because companies aren’t likely to restock their shelves as much as they did in that quarter. But after Friday’s report on consumer spending, some analysts are boosting their estimates for growth in the January-March quarter to 2.5 percent, from 2 percent.