NEW YORK - The U.S. manufacturing sector expanded in March at its strongest pace in 5 1/2 years, leading the rebound from the recession on growth in exports and inventory rebuilding. Another drop in construction spending in February, however, underscored weakness in real estate.
Meanwhile, the number of people filing first-time claims for unemployment benefits slipped last week as the economy moves closer to generating more jobs.
The Institute for Supply Management, a trade group of purchasing executives, said its gauge of industrial activity rose to 59.6 in March from 56.5 in February. It is the eighth straight month of expansion and the fastest growth since July 2004, when the index was 59.9.
Economists polled by Thomson Reuters had expected a reading of 57. A level above 50 indicates growth.
Factories are boosting production for exports and their customers are slowing the drawdown of their inventories, helping power the economic recovery worldwide.
Manufacturers said their inventories grew after 46 straight months of contraction, according to ISM. Letting inventories rise is a signal that companies expect factory activity and orders to increase.
Manufacturing surveys Thursday in China, Britain and the 16 countries using the euro all showed factory activity surging.
"The export-orientated factory sector is evidently enjoying the benefits of the rebound in world trade, whereas other sectors more dependent on domestic sales are still struggling," Paul Ashworth, U.S. economist at Capital Economics, said in a research note.
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