Growth in factory activity in the US slowed abruptly last month and consumer spending shrank for only the second time since the September 11th terrorist attacks, according to figures out yesterday.

But the reports were contradicted by other data showing income continuing to grow and construction spending surging.

The Institute for Supply Management said its index of manufacturing activity fell to a three-month low of 50.5 in February from 53.9 in January and 55.2 in December.

With 50 marking the break-even point between contraction and expansion, the February reading suggested growth in manufacturing slowed abruptly last month and the sector came closer to shrinking outright. The manufacturing sector often leads the rest of the economy.

However, the latest figures, along with other February readings on the economy, are suspect. All may have been badly distorted by unusually cold and disruptive weather across much of the country last month, when the north-east experienced its worst snowstorm in seven years.

The Commerce Department said personal spending dipped 0.1 per cent in January the first decline since last September and the second since November 2001. But it followed a sharp 1 per cent increase in December and the same report showed continued growth in income.

Personal income rose 0.3 per cent for the sixth consecutive month. Backed by productivity gains, it has grown consistently through the past three years and continues to be a critical support to consumer spending along with low interest rates.

The report also showed tame inflation with a key measure, the deflator for personal consumption expenditures, rising only 0.1 per cent for a fourth month.

The Commerce Department also said construction spending grew 1.7 per cent in January its fastest growth since February 2002, extending a significant rebound over the past six months.