Factory output and hiring rose slightly in December

U.S. manufacturing grew slightly in December, and factory hiring increased, gains suggesting that the economy entered 2013 with some momentum.

Spending on U.S. construction projects fell in November from October's levels, however, as a steep drop in volatile federal projects offset another gain in home building.

The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its index of manufacturing activity rose in December to 50.7 - up from a reading of 49.5 in November that was the lowest reading since July 2009, one month after the recession ended. A reading above 50 indicates growth, while a reading below signals contraction.

A measure of employment increased last month to 52.7, the institute said. That was up from 48.4 in November, the first time the employment gauge fell below 50 in three years.

Factories had cut jobs in three of the four previous months through November, according to government data. The jump in employment in the institute survey suggests that manufacturers may have stepped up hiring last month. On Friday, the Labor Department is to release its December jobs report.

Still, a gauge of new orders was unchanged, and production grew more slowly, the survey found. Manufacturers also cut stockpiles, a sign of concern about future demand.

"The trend in manufacturing remains weak," Jim O'Sullivan, of High Frequency Economics, said in a note to clients.

A gauge of export orders rose above 50 for the first time in six months, the institute survey said.

Growth in the U.S. economy is being driven by other sectors, such as housing. Yet, overall construction spending slipped 0.3 percent from October because a steep drop in federal projects offset another gain in home building, the Commerce Department said Wednesday.

It was the first decline since March and followed a 0.7 percent increase in October, which was revised lower. Total spending declined to a seasonally adjusted annual rate of $866 billion, 16.1 percent above a 12-year low hit in February 2011.

Even with the gain, the level of spending remained only about half of what's considered healthy.