U.S. manufacturers' business grew a bit more slowly for a second straight month in April but their costs rose to the highest level in nearly three years, an industry report showed Monday.
The economy showed other signs of crawling back to health, including a pickup in spending on construction, albeit too slowly to generate brisk employment gains.
"The economy is not falling apart despite the spike in oil prices," said Joel Naroff of Naroff Economic Advisors in Holland, Pa. "Firms are hiring, adding to inventories, seeing demand rise and exporting. Those are not signs of malaise."
U.S. factory activity eased to 60.4 in April from 61.2 the previous month, the Institute for Supply Management said, a touch higher than economists' forecasts. The index for prices paid rose to 85.5 from 85, the highest since July 2008.
Growth in new orders, output and hiring all eased from March but suggested that the economy could withstand costlier energy. A sharp decline in the value of the U.S. dollar helped the export-heavy sector.
The Federal Reserve said Monday that its latest survey of senior loan officers showed that banks had made it easier to get loans in the first three months of 2011 — a positive for the economy after a lengthy period of caution about lending.
"Some banks that had eased standards and terms … pointed to a more favorable or less uncertain economic outlook," the Fed said.
Another report showed that the battered U.S. construction industry managed a 1.4% rise in investment spending in March. But February's spending was revised down to a 2.4% drop, tempering the report's effect.
The softer tone to U.S. economic data is expected to show up in Friday's closely watched monthly report on employment.
Economists surveyed by Reuters forecast that 186,000 jobs were created in April, less than March's 216,000 and not enough to bring the unemployment rate below a lofty 8.8%.