WASHINGTON - The economic recovery gained strength on the biggest rise in construction spending in nearly a decade and the 10th-straight month of expansion for the manufacturing sector.

Temporary government incentives fueled most of the construction spending increases in April. Industry spending rose 2.7 percent with gains in all major sectors, the Commerce Department reported Tuesday.

In a separate report Tuesday, the Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index dipped slightly in May. But the 59.7 reading for May was well above the 50 level that indicates expansion.
Export orders rose last month despite the debt crisis in Europe.

"The European fiscal crisis doesn't appear to have harmed the prospects of U.S. manufacturers, at least not yet," wrote Paul Ashworth, senior U.S. economist with Capital Economics.

Construction spending was boosted by a homebuyer tax credit, which helped residential construction surge 4.4 percent in April. The tax credit expired at the end of April.
Government spending also rose on the strength of federal support. The 2.4 percent increase was aided by the economic stimulus program that Congress passed in February 2009. State and local spending jumped 2.3 percent and federal spending rose 2.9 percent.