The U.S. manufacturing sector expanded in May for a tenth straight month but at a slower pace than in April while employment rose slightly to its best level in six years, according to an industry report released on Tuesday.
The Institute for Supply Management said its index of national factory activity slipped to 59.7 in May from 60.4 in April.
The median forecast of 73 economists surveyed by Reuters was for a reading of 59.0. A reading above 50 indicates expansion in the sector.
The report's employment component rose to 59.8, the highest since May 2004, from 58.5, while new orders held steady at 65.7, suggesting slower growth in the euro zone has yet to have much effect on U.S. manufacturing.
Meanwhile, construction activity surged in April by the largest amount in nearly a decade, as all the major building sectors from housing to government projects showed strength. The unexpected surge could mean that the hardest-hit sector of the economy is starting to recover.
The Commerce Department says that construction shot up 2.7 percent last month compared to March. It was the biggest one-month improvement since August 2000.
The increase was led by a 4.4 percent jump in private residential construction, the first positive gain in this category since March 2009.
In another sign of strength, the government revised the March performance to show a gain of 0.4 percent, double the 0.2 percent increase initially reported.
Government spending rose 2.4 percent in April to $303.3 billion. State and local spending increased 2.3 percent and federal spending rose 2.9 percent. This category is being helped by the government's economic stimulus program but those projects are starting to wind down.
Weakness in construction has been a major drag on the economy as it tries to mount a sustained recovery from the deepest recession since the 1930s.
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