There was a good news-bad news mix of economic indicators out of the U.S. Thursday, and one not-so-good bit of news in Canada as well.

In the U.S., the best bit of news was from the Institute for Supply Management, which said its manufacturing index rose to 62.5 in March from February’s 61.4. Economists had expected it to slip to 60.0. A reading above 50 shows expansion. It was the 10th consecutive month of expansion in the sector that makes up less than a fifth of the U.S. economy.

That was a sign U.S. factories were busier in March, faring better than market expectations, and more manufacturers say they are willing to add workers, a hopeful sign for payroll growth.

The ISM said its monthly employment index climbed to 57.0 versus February’s 56.3. February’s reading was its highest level since December 1987. The ISM’s index is compiled from monthly responses by purchasing executives at more than 400 industrial companies, ranging from textiles and chemicals to paper and computers.

Also out were construction statistics from the U.S. Commerce Department that showed U.S. homebuilding slowed in February. But spending on other private construction projects heated up, leaving total construction outlays nearly unchanged for the month. In all, construction outlays were down 0.1% in February.

Residential spending fell 0.3%, the biggest drop since April. Private nonresidential outlays rose 1.1%, the biggest gain since September.

Homebuilding has been one of the economy’s brightest sectors, while nonresidential construction has been among the weakest. Public construction spending fell 1% to the lowest level in nearly two years, as federal spending dropped 7.2%.

Total outlays slipped 0.1% to a seasonally adjusted annual rate of $921.1 billion, the smallest since September. Economists had been looking for spending to be unchanged in February.

Another less-than-encouraging sign came from the U.S. Labor Department, which said the producer price index rose just 0.1% in February, but noted that input prices further back in the production pipeline rose much faster, including a record gain for basic industrial materials.

The 0.1% increase was less than expected. BMO Nesbitt Burns Inc. chief economist Sherry Cooper said in a report that the expectation was for a 0.3% jump. The rest of the report pointed to gently bubbling inflation pressures, particularly in “pipeline prices.” Core PPI was up 0.1% as expected, Cooper said.

“So, the last two months have seen a modest lift of core PPI inflation,” Cooper said. “Partly manufactured commodities that are usually bought by factories as inputs to make finished goods saw prices jump 0.9%. Over the past three months, intermediate goods have risen 8.9% (annualized). The year-to-year reading has turned back up after a few months of looking a bit better. Crude goods broke through the roof with a 34.0% surge in the last three months (annualized) and an even faster 59.3% pace outside of food and energy.”

Cooper said the U.S. federal reserve doesn’t care that inflation leading indicators are rising. “They will say that they don’t believe it really is, citing slack arguments. Cynically, many believe that the Fed actually wants inflation to rise, even sharply. The Fed is perfectly willing to err on the side of higher inflation. We wonder if bond fund managers are equally willing to err on the side of being long while Greenspan runs his real-time experiments.”

Early this morning, it was reported that initial U.S. jobless claims were unchanged, with the four-week average remained at the three-year low of 340,250.

The one bit of economic news in Canada was not positive. Industry Canada reported Thursday that both personal and business bankruptcies rose in February from January. A total 7,115 individuals and 768 businesses declared bankruptcy in February vs 6,110 individuals and 668 businesses in January.

In the first two months of this year, 13,224 consumers and 1,436 businesses went bankrupt vs 13,269 and 1,520 respectively during the same period a year earlier.