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US factory growth fastest in 20 years, spurs jobs

December 2, 2003
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NEW YORK, Dec 1 (Reuters) - U.S. factory activity rocketed to its fastest pace since 1983 in November and construction spending hit another record high the prior month, according to reports on Monday showing the economy's rapid growth is starting to turn the tide of three years of job losses.

The Institute for Supply Management said its manufacturing index jumped to 62.8 in November, the highest since December 1983, from 57.0 in October. That easily beat the forecasts of Wall Street economists.

With growth so strong and new orders flooding in, factories hired workers for the first time in 37 months, according to the survey. The ISM figures also suggested little slowdown ahead, with factory owners struggling to meet demand for goods.

"It's pretty eye-popping. If you look at the components, everything is very positive," said Stephen Stanley, senior markets economist at RBS Greenwich Capital.

That good news means government data to be released on Friday could show an even bigger rise in November payrolls than the 135,000 gain forecast by economists, after an increase of 126,000 in October.

"People have really underestimated the speed and improvement in the labor markets," Stanley said.

Construction spending in October posted its fourth straight record level, surging 0.9 percent and also easily beating forecasts.

Overall construction spending rose to a seasonally adjusted annual rate of $922.0 billion in the month from an upwardly revised $913.5 billion in September, the Commerce Department said. Analysts polled by Reuters had expected a 0.6 percent rise. Private residential construction spending rose 2.2 percent to a record $484.1 billion from $473.6 billion.

That suggests the economy's third-quarter 8.2 percent growth rate, also the fastest in two decades, may not slow as much as economists had originally thought.

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