U.S. Factory, Construction Reports Top Estimates

Two reports Monday on U.S. economic activity came in stronger than expected. Factory purchasing agents said conditions were somewhat less negative in March, while the government said February construction spending hit an all-time high.

Both reports reflect the health of trucking customers. Factories generate truck shipments of raw materials and parts coming in, and finished goods going out. Construction spending requires shipments of building materials, and leads to later shipments of appliances and home furnishings.

Economists had looked for the National Association of Purchasing Management to report a March manufacturing index of just 42.3, up slightly from 41.9 in February.

Instead, the NAPM said its March index hit 43.1 -- not as bad as expected, but still showing the U.S. factory sector contracting with a below-50 reading for the eighth straight month.

On Friday, buying agents for Chicago-area plants said their overall factory activity fell to 35 in March from 43.2 in February, to the weakest level since March 1982. The Milwaukee group’s index sank to 37 from 41.

Once those reports showed the factory-sector contracting more last month, some analysts revised downward their expectations for Monday’s report from the national group. Then it came in somewhat above market estimates even though it still shows a recession in that sector.

The U.S. Commerce Dept. said Monday that spending on construction projects rose 0.6% to a record seasonally adjusted annual rate of $834.2 billion. Markets had expected the spending level to rise, given that cuts in interest rates have fueled new construction, but looked for a gain of just 0.4%.

These reports add to the mixed pattern of data emerging in recent weeks. Some reports, especially those linked to consumer spending patterns, are still holding up with moderate growth.

However, the nationwide industrial sector has been hit hard and companies keep announcing new layoffs or plant cutbacks, and some retailers are also curbing activity or closing stores.