US manufacturing growth picks up in April

The pace of growth in the US manufacturing sector picked up in April to its highest level in 10 months, suggesting the economy still had some resilience after indications it had lost momentum at the start of the second quarter.

The Institute for Supply Management said on Tuesday its index of national factory activity rose to 54.8 from 53.4 in March. The figure bested expectations for a decline to 53.0 and came in above the top end of forecasts, according to a Reuters poll.

A reading below 50 indicates contraction in the manufacturing sector, while a number above 50 means expansion.

ISM's gauge of employment also rose to the highest level since June to 57.3 from 56.1. The forward-looking new orders component racked up its best reading in a year at 58.2 from 54.5.

"The view on the economy has swung from optimism to pessimism of late and this could bring us back to the middle," said Nick Bennenbroek, head of FX Strategy for North America at Wells Fargo.

"ISM suggests there's no real reason to get too concerned about the path of the US economy at this point."

US stocks turned positive immediately after the data, while Treasuries prices turned lower and the dollar hit session highs against the yen and euro.

Separate data on Tuesday showed construction spending barely rose in March as investment in public projects dropped to a five-year low.

Construction spending edged up 0.1% to an annual rate of $808.07 billion, the Commerce Department said, after a revised 1.4% drop in February. Economists polled by Reuters had expected construction spending to rise 0.5%.