U.S. manufacturing grows again, but recovery fragile

Signs the housing market was bouncing back in October were also tempered by a flat reading for construction spending for that month in other data reported on Tuesday.

The Institute for Supply Management said on Tuesday its index of national factory activity decelerated to 53.6 in November from 55.7 in October. The median forecast of 70 economists surveyed by Reuters was for a reading of 55.0 in November. Readings above 50 indicate expansion in the manufacturing sector, while numbers below 50 show contraction.

"We're basically four months into a somewhat weak recovery. It will take a while to spread across 18 manufacturing industries," said Norbert Ore, chairman of the ISM manufacturing business survey committee in Atlanta, Georgia.

The U.S. dollar trimmed gains against the yen after the manufacturing report, while U.S. stocks were little changed, but U.S. Treasury bond prices firmed.

The ISM report was "a bit less-than-expected but overall still a strong number when added to the previous monthly levels that were greater than 50," said Tom Sowanick, chief investment officer with the Omnivest Group in Princeton, New Jersey.

"Note that the China ISM was also up last night which confirms that we are in a global recovery," Sowanick added.

But the ISM report's employment index for the manufacturing industry slipped to 50.8 in November from 53.1 in October, which had been the strongest showing since April 2006.

"Given the number of manufacturing jobs lost and the number of facilities closed, rarely are those reopened. It will take more growth than we're seeing right now to create significant growth in manufacturing jobs," Ore said.

New manufacturing orders rose to 60.3 in November from a 58.5 reading in October.