US factory, construction data bolster growth prospects

US manufacturing appeared to stabilise in February, with production accelerating and new orders holding steady at higher levels, in another dose of good news for the economy after growth slowed in the fourth quarter.

The economic outlook was further bolstered by another report on Tuesday showing construction spending scaling a more than eight-year high in January. Though automobile sales slowed a bit in February, they remained at levels consistent with strong consumer spending.

The reports added to upbeat data on consumer spending, the labor market, industrial production and durable goods orders in suggesting that economic growth picked up at the start of the first quarter, which should further ease fears of a recession.

"To be clear, none of this data are at levels suggesting a boom, far from it, but neither do they support the notion of an economy slipping into recession," said Steve Blitz, chief economist at ITG Investment Research in New York.

The Institute for Supply Manage-ment (ISM) said its index of national factory activity increased 1.3 percentage points to a reading of 49.5 last month, the highest reading since September.