By John S. McClenahen U.S. manufacturing will not be back to its pre-recession level of activity until the first quarter of 2004, contends Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, an Arlington, Va.-based business policy group. "The goods side of the economy continues a rebound from a recession relapse in the fall [of 2002], but the pace is slow and very prolonged." The latest data from the Tempe, Ariz.-based Institute for Supply Management (ISM), show just how slow the manufacturing pace is. The group's PMI index was at 50.5% in February, some 3.4 percentage points below its January figure of 53.9% and just barely above the 50% mark that divides manufacturing expansion from manufacturing contraction. "While production remained strong, there was a significant slowing in the rate of growth of new orders," notes Norbert J. Ore, the chairperson of ISM's manufacturing business survey committee and group director of strategic sourcing and procurement for Georgia-Pacific Corp. The latest data "threw a splash of cold water on the view that the late-2002 spurt in the manufacturing sector was anything more than a brief -- and ill-timed -- auto-related inventory buildup," says David Rosenberg, chief North American economist at Merrill Lynch & Co., New York. Meanwhile, construction put in place during January was at a seasonally adjusted annual rate of $877.9 billion, 1.7% above the revised December 2002 rate of $863.4 billion, says the U.S. Commerce Department. That's stronger than economists generally expected. However, "spending on remodeling dropped 1.4%, though it is still up 6.5% from a year ago," points out Merrill Lynch's Rosenberg. Coming on top of last week's 15% drop in new home sales and a two-year high in the inventory of unsold homes, he wonders if the U.S. economy is starting to show signs of overbuilding. Consumers do appear to be cutting back on their spending. In January, personal consumption expenditures fell $8.7 billion to a seasonally adjusted annual rate of $7.469 trillion, reports the Commerce Department. Disposable personal income grew 0.3% in January, one-tenth of a percentage point less than its 0.4% advance in December 2002.