Construction spending rose more than expected in March, and a survey of factory activity in April increased, suggesting steady recovery in U.S. demand.
The pace of growth in the U.S. manufacturing sector slowed in April for a second straight month but input prices were at their highest in nearly three years, according to an industry report released on Monday.
* The Institute for Supply Management said its index of national factory activity fell to 60.4 in April from 61.2 the month before. The figure topped economists' forecasts for a reading of 60. The index for prices paid rose to 85.5 from 85, the highest since July 2008.
* A reading above 50 indicates expansion in the sector.
* The Commerce Department said construction spending increased 1.4 percent to an annual rate of $768.9 billion, reflecting strong gains in private residential and nonresidential outlays. February's construction, however, spending was revised to show a bigger 2.4 percent drop than the previously reported 1.4 percent decline.
* Economists polled by Reuters had forecast construction spending rising 0.4 percent in March.
STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO., GREENWICH, CONNECTICUT:
ISM: We're continuing to see quite robust readings on this data series. It's rather resilient despite the GDP numbers. but that's been one of the strong points since the beginning of this cycle and continues to point to larger growth rates as far as manufacturing is concerned.
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC SECURITIES, NEW YORK:
Overall this looks like a fairly solid report and is consistent with manufacturing being fairly buoyant here. Even some of the comments made by respondents are fairly encouraging and conducive for manufacturing. From an overall GDP perspective it reflects that the economy is moving along at a fairly moderate clip.
JAMES NEWMAN, HEAD OF TREASURY TRADING AND AGENCY TRADING, KEEFE, BRUYETTE, AND WOODS, NEW YORK
It looks like good data, prices paid is a little bit higher that what they were looking for and the number itself is almost stronger by one-tenth. Its good data, the market is selling off a little bit but I wouldn't call it market moving.
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS:
March's construction spending report with a 1.4% rise saw its first increase since November and its strongest rise since April 2010, comfortably exceeding a consensus for a 0.4% increase even with net revisions marginally negative. January's change was revised up by 0.8% to -1.0% from -1.8%, but February was revised down by 1.0% to -2.4% from -1.4%. The underlying construction picture is weak but the March rebound suggests a harsh winter exaggerated the 3 straight declines (now totaling 6.6%) that preceded it, with more favorable weather in March seeing those losses partially corrected.
MARKET REACTION: STOCKS: U.S. stock indexes tacked on gains BONDS: U.S. bond prices added losses FOREX: The dollar was little changed