Data released on Monday suggested that the US is weaning out of its worst recession since the Great Depression, though the speed of that growth remains suppressed.
Manufacturing activity grew at a slower pace in November than expected, while construction was flat in October.
Separately, a forecasting gauge of housing-market activity climbed to its highest level in more than three years in October, thanks to government tax credits that continued drawing home buyers into the market.
The Institute for Supply Management reported on Tuesday manufacturing activity expanded in last month for the fourth consecutive month. It's index of manufacturing activity moved to a reading of 53.6 from 55.7 a month earlier, short of the 55.0 economist had expected. Readings above 50 signals expansion.
While the rate of growth slowed when compared to October, the signs are still encouraging for continuing growth as both new orders and production are still at very positive levels, said Norbert Ore, who directs the survey. The recovery in manufacturing is continuing, but many are still struggling in the sector, he added.
New orders -- an indication of future growth -- came in at 60.3 versus 58.5 in October, while inventories contracted to 41.3 from 46.9 a month earlier.
Employment also saw slower growth, with the index at 50.8 percent from 53.1 percent a month earlier.
Spending on U.S. construction projects was flat in October and revised data now indicate that spending has not risen since April, the government reported Tuesday.
Overall, spending on construction projects barely changed in October, at a seasonally adjusted annual rate of $910.77 billion compared to the prior month, the Commerce Department said Tuesday.
September numbers were revised to show a fall of 1.6 percent in September . This was the biggest drop since January and is in start comparison with the previous September estimate of a 0.8 percent gain.
Year over year, construction spending is down by 14.4 percent.
Spending in October on residential construction projects rose 4.2 percent to $258.5 billion while residential spending fell 1.8 percent in September, adjusted from an originally reported 3.9 percent increase. Year over year, residential spending was 23 percent below the October 2008 level.
Commercial construction slid in October, decreasing 1.5 percent, as outlays, fell for hotels, hospitals, and roads. Year over year, spending for commercial construction was down 10.5 percent. Rising vacancy rates for office space, falling rents, and tight credit conditions are hurting the sector.
Construction spending in the private sector during October increased by 0.3 percent to $589.0 billion. Spending fell 3.0 percent in September, and public-sector construction spending fell 0.4 percent to $321.8 billion.
Pending Home Sales Increase
Pending sales of previously owned U.S. homes rose unexpectedly to their highest level in 3.5 years in October, a survey showed on Tuesday, suggesting the housing market recovery was gaining steam.
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in October, rose 3.7 percent to 114.1, rising for a ninth straight month. This is the longest streak of gains since the series started in 2001.
Analysts had forecast pending home sales, which lead existing home sales by one to two months, falling 0.8 percent in October after rising to 110 in September.
Recovery is being supported by the popular $8,000 tax credit for first-time buyers, low mortgage rates and falling house prices. The government last month extended the incentive into next year and added a $6,500 credit for home owners buying a new residence.
Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010, NAR Chief Economist Lawrence Yun said.