Dec 2, 2003 By Brad Foss Ap Business Writer 3 min read

A pair of upbeat reports reinforced rising optimism about the nation’s economic recovery: the manufacturing sector expanded in November for a fifth consecutive month and at its fastest rate in nearly two decades, while October construction spending was the best month on record. “We’re clearly coming out of the woods,” Sung Won Sohn, chief economist at Wells Fargo in Minneapolis, said Monday in the wake of the new reports.

The Institute for Supply Management reported that its manufacturing index soared last month to its fastest clip since December 1983. The index registered at 62.8, a large increase from the October reading of 57 and well above analysts’ expectations of 58.1.

An index reading above 50 indicates expansion; one below 50 indicates that manufacturing activity is contracting.

Economists said the most encouraging detail in the manufacturing report was an employment increase – the first time the industry has added jobs in more than three years.

“If factory employment is starting to improve – and that has been one of the toughest nuts to crack – then we are likely to see growth across all sectors,” said Douglas Porter, senior economist at Nesbitt Burns Securities of Chicago. “That is truly an encouraging result.”

President Bush hailed Monday’s manufacturing report as evidence that his administration’s tax cut was helping to improve the finances of ordinary Americans as well as the economy at large.

“With all these actions, we are laying the foundation for greater prosperity and more jobs across America so every single citizen has a chance to realize the American dream,” Bush told donors at a fund-raiser in Dearborn, Mich.

Also on Monday, the Commerce Department reported that the total value of building projects under way came in at a seasonally adjusted $922 billion in October, a 0.9 percent increase from the previous month.

The $922 billion level was an all-time monthly high, and the percentage change from the previous month was even better than the 0.6 percent rise that analysts were forecasting.

The strength in construction was fairly broad-based, with spending by private builders on residential construction and spending by government on big public works projects each posting the highest monthly level on record.

Spending by private builders on residential projects grew by 2.2 percent in October to $484 billion. Those gains helped offset cutbacks in spending on other types of construction, including factories and hotels and motels.

Spending by government on big public works projects increased by 1.2 percent to $224.7 billion. Stronger spending on schools, health-care buildings and transportation facilities helped to blunt weaker spending on highways and streets and public safety facilities.

On Wall Street, investors were encouraged by the manufacturing and construction data.

For the manufacturing sector, November was the best month since December 1983, when the ISM index registered at 69.9.

The employment index registered at 51 in November, up from 47.7 in October and the first reading above 50 in 37 months.

The report said that 18 of 20 industries reported increased production in November, including photographic equipment, electronic components, transportation, chemicals and textiles.

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Associated Press Writer Jeannine Aversa in Washington contributed to this report.

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