Manufacturing aids recovery with year of growth

WASHINGTON - It's a rare bright spot in an otherwise troubled economy: The nation's manufacturing sector has now grown for a solid year, and more of its companies say they're ready to hire.

Chip maker Texas Instruments says its business has recovered to pre-recession levels. Intel, which makes semiconductors, posted its best quarterly profit in a decade. And chemical giant DuPont says its sales volume is up and recently raised its prices.

The Institute for Supply Management said Monday that its manufacturing index slipped in July, to 55.5 from 56.2 in June. But it was the 12th straight month of readings above 50, which indicates expansion. At the depths of the recession, the index was closer to 30.

"Yes, the pace eased back a touch, but it was nothing to be worried about," said Joel Naroff, president and chief economist for Naroff Economic Advisors.

Measures of production and new orders, which signal future business, both grew again, although more slowly than in June. And more manufacturers said they were willing to hire workers.

Manufacturing growth has cooled for the past three months, but most of that was expected. The industry experienced strong growth last year because companies were replenishing their stockroom shelves after the recession.

Manufacturing accounts for about one-fifth of U.S. economic activity, so it can't carry the recovery on its own. But at a time when the housing market, consumer spending and other sectors of the economy are limping along, any sustained growth is welcome news.

The housing market has struggled since a tax credit for home buyers expired in April, a point confirmed Monday by a separate report that showed construction spending edging up slightly in June, with all the strength coming from government building.

Spending on housing construction fell in June for a second consecutive month, dropping 0.8 percent after an even bigger 1.5 percent decline in May. Spending on nonresidential building projects fell for a 15th consecutive month, dropping 0.5 percent in June.

The only strength for the month came in the government sector. Overall public construction rose 1.5 percent. That reflected a 1.1 percent increase in spending by state and local governments on roads, sewer projects and public buildings, and a 4.6 percent increase in federal government spending on projects.

In a speech Monday in South Carolina, Federal Reserve Chairman Ben Bernanke said the nation faces a long road back to good economic health.