Factory Index Posts Advance

The nation’s industrial sector ended 2004 on a high note, with manufacturing activity expanding in December for the 19th consecutive month, a research group reported Monday. But the government said construction spending dropped in November as builders reined in projects in anticipation of higher interest rates.

The Institute for Supply Management said its main index of industrial activity rose to 58.6 in December from 57.8 in November.

The December performance was slightly more robust than analysts had anticipated.

A reading of 50 or above in the index means the manufacturing sector is expanding; a figure below 50 represents a contraction. The index has been 50 or above since May 2003.

Norbert J. Ore, chairman of the institute’s survey committee, said the December results were driven by a “significant increase” in the group’s index of new orders.

He added that the strong finish for 2004 meant that manufacturing had “significant momentum going into the first quarter of 2005.”

Separately, the Commerce Department reported that construction spending declined 0.4% in November, the first drop in 10 months, as private builders cut back on residential and commercial projects.

Analysts had forecast a 0.5% rise in construction spending.

Still, even with the drop, the level of spending -- $1.01 trillion on an annualized basis -- was quite healthy. And construction activity in October turned out to be significantly stronger than initially thought. Revised figures showed that spending in October rose 0.3%, compared with the initially reported flat reading.