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updated 1/3/2011 11:53:26 AM ET 2011-01-03T16:53:26

Reports on U.S. construction spending and manufacturing activity released Monday show continued growth in the final months of 2010 — further signs that the economic recovery is gaining momentum.

The Commerce Department said construction spending increased 0.4 percent to an annual rate of $810.2 billion, the highest level since June, after rising by an unrevised 0.7 percent in October. November's increase in construction outlays marked the third straight month of gains.

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Economists polled by Reuters had forecast construction spending gaining 0.2 percent in November.

The report was the latest to indicate acceleration in the economic growth pace in the fourth quarter after output expanded at a 2.6 percent annualized rate in the July-September period.

Separately, the Institute for Supply Management, a trade group, said U.S. manufacturers produced more goods and booked more orders last month, leading to the fastest growth in factory activity since May.

The ISM’s index of manufacturing activity rose to 57 in December from 56.6 in the previous month. Any reading over 50 indicates growth.

The index rose to 60.4 in April, the highest level since June 2004. It had bottomed out at 32.5 in December 2008, the lowest since June 1980.

The latest report shows that manufacturers carried considerable momentum into the new year. The new orders index rose sharply to 60.9, also the highest since May. The production index also jumped.

The Associated Press and Reuters contributed to this report.

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