* Manufacturing activity cools in May, orders slow
* Construction spending rises 0.2 percent in April
WASHINGTON, June 2 U.S. manufacturing activity
slowed last month and construction spending rose less than
expected in April, which could temper hopes of a sharp pick-up
in economic growth this quarter.
The Institute for Supply Management (ISM) on Monday said its
index of national factory activity fell to 53.2 in May from
April's reading of 54.9. A reading above 50 indicates expansion.
The slowdown reflected some cooling in new order growth,
production and hiring.
"It looks softer across the board. All the components grew
at a slower pace. I don't think this signifies a big concern but
manufacturing won't be leading the economy," said Gus Faucher,
senior economist at PNC Financial Services in Pittsburgh.
In a separate report, the Commerce Department said
construction spending increased 0.2 percent to an annual rate of
$953.5 billion, the highest level since March 2009.
The increase was less than economists' expectations for a
0.6 percent gain. March's construction spending was revised to
show a 0.6 percent rise instead of the previously reported 0.2
Coming on the heels of weak consumer spending data for
April, the reports could cast doubts on the economy's ability to
reach a 4 percent growth pace in the second quarter as some
The economy shrank at a 1.0 percent rate in the first
quarter, largely reflecting a brutally cold winter and a slow
pace of restocking by businesses.
Prices for U.S. Treasury debt rose on the data, while the
dollar fell from a three-week high against the yen.
Spending in April was led by public construction outlays,
which rose 0.8 percent. Spending on both federal government and
state and local government projects increased solidly.
But spending on private construction projects was flat as a
0.1 percent rise on residential outlays was offset by a 0.1
percent dip in nonresidential projects.
Still, private residential construction spending hit its
highest level since March 2008. There were increases in both
single and multi-family home building, a hopeful sign for
housing, which is struggling to find momentum.
A run-up in mortgage rates has stymied the housing market
recovery. Investment in home building and nonresidential
structures such as factories and gas pipelines contracted in the
first three months of this year for a second straight quarter.
(Reporting By Lucia Mutikan; Additional reporting by Richard
Leong and Rodrigo Campos in New York; Editing by Andrea Ricci)