Hopes that U.S. factories will help drive the economic recovery gained support Monday from news that manufacturing activity grew in January to its strongest point since 2004.
Other reports Monday offered a reminder that the recovery remains fragile. Construction spending sank in December to its lowest level in more than six years. And gains in personal income and spending were too modest in December to suggest that consumers can fuel a strong rebound.
"Right now we're getting a recovery," said Michael Gregory of BMO Capital Markets.
"But you have to be skeptical. This kind of performance cannot be sustained unless we get those other areas that are still weak in the economy to contribute to growth - housing, construction, real consumer spending," he said.
Manufacturing activity has become a pocket of strength, though some of it flows from temporary factors such as customers needing to add to depleted stockpiles of goods.
The Institute for Supply Management said its manufacturing index read 58.4 in January, compared with 54.9 in December. It was the sixth straight month of expansion. Analysts polled by Thomson Reuters had expected a level of 55.5. A reading above 50 indicates growth.
New orders, a sign of future growth, jumped in January to its highest level since 2004. So did current production. Order backlogs grew, along with prices companies paid.
Thirteen of 18 industries said that they were expanding, led by the apparel, textile mills and machinery sectors.
Economists worry that once inventory levels are stabilized, however, manufacturing growth will slow as unemployment remains high and spending tepid.
"A short term burst of contribution from inventories and fiscal stimulus will fade," said Paul Dales of Capital Economics. "Consumption is not in any position to take up the slack."
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