U.S. manufacturing activity unexpectedly accelerated in October as new orders rebounded strongly, which should ease concerns of a significant moderation in economic growth in the fourth quarter.
Other data Monday showed strong automobile sales last month, although top-seller General Motors (GM) missed expectations.
The Institute for Supply Management said its index of national factory activity rose to 59 last month from a reading of 56.6 in September. The index is now back at a 3½ year high touched in August.
The reading exceeded expectations of 56.2, according to a Reuters poll of economists, topping even the most optimistic estimate of 57.3. A reading above 50 indicates expansion in the manufacturing sector.
The employment gauge recovered in October to 55.5 from 54.6 in September, while the new orders index rose to 65.8 from October's reading of 60.
The upbeat report suggests that the economy retained much of its momentum from the third quarter.
There have been fears that growth in the final three months of the year could slow down significantly after reports last week showed weak consumer spending and business investment plans at the end of the April-June quarter.
The government last week reported that the economy grew at a 3.5 percent annual pace in the third quarter.
Construction spending dropped 0.4 percent to an annual rate of $950.9 billion, the Commerce Department said.
August's construction outlays were revised to show a 0.5 percent fall instead of the previously reported 0.8 percent decline.
Economists polled by Reuters had forecast construction spending rising 0.7 percent.
In September, private construction spending dipped 0.1 percent to its lowest level since October last year as an increase in residential outlays was offset by a decline in spending on nonresidential projects. It was the fourth straight month of declines in private constructions spending.
Spending on public construction projects fell 1.3 percent in September, with state and local government investment declining 1.4 percent. Spending on construction projects by the federal government slipped 0.3 percent, falling for a third consecutive month.
9 Numbers That'll Tell You How the Economy's Really Doing
Factory Activity Growth Rebounds; Construction Spending Weak
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.