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Other economic reports Tuesday showed variation.
Construction spending: The Commerce Department says construction spending barely edged up – just 0.1 percent in May – after a much stronger 0.8 percent April increase. The back-to-back gains followed a period of weakness in which spending fell in both January and February and was flat in March.
Home prices: Data provider CoreLogic says prices increased 8.8 percent from May 2013 to May 2014. The pace of gains has slowed as more homes have come onto the market, according to CoreLogic.

US manufacturers expand in June, but slowly

– U.S. manufacturing grew in June for the 13th straight month. But the pace of the expansion slowed from May.

The Institute for Supply Management said Tuesday that its manufacturing index dipped to 55.3 in June from 55.4 in May. Any reading higher than 50 signals that manufacturing is growing.

The trade group of purchasing managers said that orders rose at a faster pace last month than in May. But growth in production and exports slowed. A measure of employment shows that factories added jobs for the 12th straight month; the pace of hiring last month was the same as in May.

Fifteen of 18 manufacturing industries grew in June, led by furniture makers and mineral producers. Textile, chemical, and plastics and rubber making contracted in June.

Last week, the Commerce Department reported that orders for U.S. durable goods fell 1 percent in May, dragged down by a drop in demand for military equipment. Excluding defense-related goods, orders rose.

And in a good sign for future business investment, orders for core capital goods rose 0.7 percent.

Increased spending by businesses would give the economy some momentum after it got off to a bad start this year: The U.S. economy shrank at a 2.9 percent annual rate from January through March.

But economists blame the first-quarter drop on an unusually bitter winter and a sharp reduction in businesses’ inventories. They expect economic growth to rebound to an annual pace of 3 percent the second half of 2014.

The job market has been steadily improving. Employers added 200,000 jobs in May for the fourth straight month, the longest such stretch since 1999. Factories added 10,000 jobs in May.

Analysts at Stone McCarthy Research Associates said the ISM survey’s employment measure is “consistent with further gains in manufacturing payrolls.” They estimate that factories added another 10,000 jobs in June.

Economists have been worried about the fallout from slower economic growth in China. But a survey out Tuesday showed that Chinese manufacturing grew in June for the first time in six months, though the expansion was weak.

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