Manufacturing offers hope

Brighter news on manufacturing is offering more hope that the longest recession since World War II is near an end. But with construction and many other segments of the economy still weak and unemployment rising, any rebound likely will be slow.

A key gauge of manufacturing showed Wednesday that industry activity declined less than expected in June. The Institute of Supply Management's manufacturing index posted a 44.8 -- the best showing since last August, a month before the financial crisis erupted with force.

Manufacturing sectors overseas also signaled a bit of a rebound, though other U.S. economic news was more mixed. Ford Motor Co. reported the smallest sales decline of the year in June, but sales at struggling Chrysler Group LLC continued to plunge.

Outside of manufacturing, construction spending fell in May for the seventh time in the past eight months. Spending dropped more than expected as strength in nonresidential building was eclipsed by a decline in housing construction and weakness in government projects.

But in a hint of better days to come, the National Association of Realtors said an index of pending home sales edged up 0.1 percent in May. It was the fourth straight advance for the index, which tracks contracts to buy previously owned homes.

"I think the great recession is winding down," said Mark Zandi, chief economist at Moody's "Retailing should firm a bit in the next few months, helped by the stimulus package, and I think lean inventories will trigger production increases."

After a period last winter when the economic news was unrelentingly bad, many analysts said the mixed nature of the new reports showed an economy starting to turn the corner. But they cautioned against expecting anything but a weak recovery.