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Rise in US construction spending

The US enjoyed the biggest rise in construction spending in nearly a decade in April as the economic recovery continued in the States.

The largest economy in the world also witnessed the 10th straight month of expansion for manufacturers.

Economists said the two independent pieces of positive news eased fears that the US economic rebound could be stunted by the debt crisis engulfing the eurozone.

“The recovery is still on track,” said Brian Bethune, a senior economist at IHS Global Insight. He added that the troubles in Europe could affect the profits of US companies who do business in overseas markets, but concluded, “it’s not going to be a show-stopper.”

The boost in April construction spending reported on Tuesday by the US Commerce Department sent a promising signal for an industry that was among the hardest hit during the recession. The 2.7% increase was spread across all major sectors. But temporary government incentives fuelled gains in two of three major categories. The economy will eventually have to manage with less government support.

In a separate report, the Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index dipped only slightly in May from a nearly six-year high in April. But the 59.7 reading for May was well above the 50 level that indicates expansion. Export orders rose despite Europe’s troubles.

The group’s employment index, which measures employers’ willingness to hire, rose 1.3%. That was the highest level since May 2004. New orders, a gauge of future production, were unchanged.

“The European fiscal crisis doesn’t appear to have harmed the prospects of US manufacturers, at least not yet,” wrote Paul Ashworth, senior US economist with Capital Economics.

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