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And a closely watched survey released earlier this month suggests overall manufacturing conditions are improving. Manufacturing activity grew last month at the fastest pace since April, according to the Institute for Supply Management. Factories saw growth in new orders, hired more workers and boosted their stockpiles after two months of declines, the survey noted. Slower growth in stockpiles was a key reason the economy shrank at an annual rate of 0.1 percent in the October-December quarter, the first contraction in 3 1/2 years. Deep cuts in defense spending and fewer exports also contributed to the decline. Still, economists expect that figure will be revised in the coming months to show a small increase. That's because December trade data, which wasn't available when the government calculated its first estimate for fourth-quarter growth, showed solid growth in exports. Economists at Barclays Capital estimate the economy expanded at a 0.5 percent rate in the fourth quarter. And growth will likely pick up in the January-March quarter to an annual rate of 1.5 percent, analysts forecast. A better job market could boost consumer spending, leading to faster U.S. growth. Employers added 157,000 jobs in January and an average of 200,000 jobs a month since November. U.S. factories have added jobs for the past four months. Still, unemployment remains high at 7.9 percent. And Americans are seeing smaller paychecks this year because of an increase in Social Security taxes, which could offset any benefits from stronger hiring.
[Associated
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