NEW YORK and WASHINGTON -- U.S. manufacturing activity grew in June, rebounding from an unexpected contraction the prior month, but hiring in the sector was the weakest in nearly four years, an industry report showed on Monday.
The Institute for Supply Management said its index of national factory activity in June rose to 50.9 from 49.0 in May, a touch above of expectations of 50.5. A reading above 50 indicates expansion in the sector.
The gauge for new orders rose to 51.9 from 48.8, while production jumped to 53.4 from 48.6, helping the overall index bounce back from May's contraction - the first in six months.
But a measure of employment fell to 48.7, the lowest reading since September of 2009. It stood at 50.1 in May.
That could feed concern about the strength of the U.S. recovery, particularly now that the Federal Reserve has said it is considering scaling back its massive stimulus program.
Economists polled by Reuters expect the broader U.S. economy to have slowed to 1.7 percent in the second quarter, though most say it should pick up steam in the second half.
The economy grew at a 1.8 percent rate in the first three months of the year, with consumer spending having grown less than initially thought.
Construction Sector Regains Strength
Separately, the Commerce Department reported U.S. construction spending rose to its highest level in nearly four years in May, as a sharp rebound in public outlays offset a decline in investment in private nonresidential projects, pointing to moderate economic growth.
Construction spending increased 0.5 percent to an annual rate of $874.9 billion, the agency said Monday. That followed a revised 0.1 percent gain in April.
Economists polled by Reuters had expected construction spending to rise 0.6 percent in May after a previously reported 0.4 percent increase the prior month.
The construction sector is regaining some strength after collapsing during the recession, but the recovery remains slow as the commercial real estate market and factory construction is yet to pick up. The housing market is leading much of the recovery in construction.
In the first quarter, growth in spending on nonresidential structures contracted for the first time in two years.
Construction spending in May was lifted by a 1.8 percent rise in public construction projects, the biggest rise in nearly a year, after two straight months of declines. Public construction spending in May touched its highest level since November last year.
Outlays on federal government projects rose 0.6 percent, advancing for a second straight month. State and local spending, which is far larger than federal projects, jumped 1.9 percent to a six-month high.
Spending on private construction projects was flat. Residential construction spending increased 1.2 percent to its highest level since October 2008. Spending had dipped 0.1 percent in April, and part of the increase in May was due to renovations, which do not go into the calculation of GDP.
Spending on private nonresidential structures fell 1.4 percent in May after three straight months of gains.
9 Numbers That'll Tell You How the Economy's Really Doing
Manufacturing Rebounds in June; Construction Spending Soars
The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.
The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.
The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.
The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.
Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.
Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.
The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.
Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.