U.S. manufacturing expanded at the slowest pace in two years in July.

Monday's report comes from the Institute for Supply Management . It disappointed investors who have seen manufacturing as a rare bright spot in the faltering U.S. economy.

Factories face slack demand as high energy prices and high unemployment crimp consumer spending.

The new data follow reports last week that the U.S. economy grew more slowly than first thought during the first half of this year.

A separate report from the U.S. Commerce Department showed spending on new office buildings, shopping centers and hotels grew two-tenths of a percent in June, the best expansion in six months. While construction spending grew a bit in June, the pace of spending remains below that seen in a healthy economy.