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US Manufacturing Grows in July, But Economy Mixed Overall


Several reports released Tuesday are giving a mixed picture of the U.S. economy.

The manufacturing and construction sectors posted unexpected growth in July. But consumer spending grew modestly in June, and a key measure of inflation reached the highest point in 11 years.

Tuesday's report from a business group, the Institute for Supply Management, says manufacturing activity beat expectations and accelerated in July, boosted by a growth in new orders and employment.

Another report from the U.S. Commerce Department says spending on new construction rose three-tenths of a percent in June. That brought construction spending to a monthly record of $1.2 trillion.

But in a separate Commerce Department release, personal spending rose at a sluggish four-tenths of a percent in June. That is a smaller increase from previous months, with higher energy prices leaving consumers with less to spend.

Economists watch personal spending because it is a measure of the consumer demand that drives about two-thirds of U.S. economic activity.

Meanwhile, a key measure of inflation shot up two-tenths of a percent in June, bringing the yearly rate to its highest since 1995. That measure of inflation is tied to consumer spending, and excludes food and energy prices. It is watched closely by the U.S. central bank.

The reports were released before the U.S. treasury secretary made his first major speech since being sworn in three weeks ago. Henry Paulson said he backs a strong dollar, and expressed concern over the size of the U.S. trade deficit.

Some information for this report was provided by AFP and Reuters.