Economic activity in the manufacturing sector grew for the third consecutive month during January while construction spending moved up in December and diesel fuel prices reached their highest levels since 2000 according to three separate reports released Monday.

The Institute for Supply Management reported their index of manufacturing activity registered 53.9 in January. While the figure is down from December’s 55.2, it was above what some analysts were predicting and still indicates the sector is expanding. A figure below 50 indicates contraction.
ISM’s closely watched new orders index, an indication of future output, fell slightly in January to 59.7 from 62.9 a month earlier. However, the group said its high level was still positive news and that low customer inventories should keep new orders and growth strong.
"The manufacturing sector continued its growth trend in January, though the rate of growth slowed when compared to December,” said Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee. ”It is encouraging that new orders continued strong in January. Production also fared well, providing cause for optimism for an improving economy in the first quarter."
In contrast, factories continued to shed workers, with the employment index slipping to 47.6 during January from 48.2 in December. It has remained below 50 for more than two years, due to the loss of about 2 million manufacturing jobs since 2000. Meantime, a separate report on the same day indicated new
construction in the U.S. increased by a greater than expected amount. The Commerce Department reported a 1.2% hike in spending in December, due mainly to a surge in residential building. For all of 2002 construction spending increased just 0.4%, the weakest increase in 11 years. Last year’s increase was fueled by residential construction while non-residential building in contrast, fell 16.4%. The decline is attributed to a 43.8% drop in construction spending for factories and plants compared to the year before. Outlays for office buildings dropped 27.3%, while spending for hotels and motels slid 29.1% compared to 2001. Finally, on Monday the U.S. Energy Department reported a five-cent per-gallon increase in the weekly average price of diesel fuel to $1.54.2, the highest since December, 2000. Prices increased in every region of the country and now range from a low of $1.50 per gallon in the Rocky Mountain region to a high of $1.66 per gallon in the Central Atlantic region. Diesel is averaging $0.389 cents a gallon higher than last year at this time throughout the country. Concern over the U.S. launching an attack against Iraq among other Middle East tensions, and the continued lack oil of coming from Venezuela due to a general strike, are getting the blame for much of the continued increase in fuel prices.