US consumer spending, which is often seen as the engine for economic growth in the US, remains healthy.

But American factories are still struggling, and they have done so for months.

Such is the two-speed US economy according to fresh data.

"It does seem like the consumer and manufacturing are on different planets," said James Glassman, senior economist at JP Morgan Chase.

For better or for worse

But whereas economists agree that either consumers must cut spending, or if they do not the situation must improve for manufacturers, they fail to agree on which side of the fence the economy will fall.

"When you take into account the improved mood in financial markets, the [Federal Reserve's interest] rate cut and the expectation for fiscal stimulus, we suspect things will pickup overall from here," predicted Mr Glassman.

But Lehman Brothers senior financial economist Drew Matus was not convinced.

"There's no sea change," he insisted.

"The economic outlook remains as uncertain as ever".

Conflicting emotions

The data economists were exited about was an index of manufacturing activity, released by The Institute for Supply Management, which showed that the sector is still contracting.

According to this index, the sector has been shrinking for three months.

"All is yet to be right in the manufacturing heartland," said forecaster Joel Naroff of a Holland, Pennsylvania.

And yet, US consumer spending rose 0.3% in October.

And record sales by the US retailer WalMart just as the Christmas sales season kicked off further boosted economists' confidence.

"Once again the consumer is doing his job, but it is still the business sector having problems," said David Wyss, chief economist at Standard & Poor's in New York.