WASHINGTON – The nation’s economy is managing to grow modestly, reports Monday showed, despite high U.S. unemployment and growing alarm about Europe’s debt crisis.

Manufacturing expanded in September more than in August, though the pace of growth remains weak, according to a survey by the Institute for Supply Management. The ISM said its manufacturing index rose for the first time in three months.

And construction spending increased in August, the government said. The gain was due mostly to a pickup in state and local government projects.

In addition, U.S. auto sales rose in September, largely because consumers bought more pickups and SUVs, U.S. automakers said.

Collectively, the reports suggested that the U.S. economy may be able to avoid another recession but will continue to struggle.

Stocks fell sharply in afternoon trading as worries persisted about Europe’s debt crisis. Greece said earlier in the day that it would miss deficit-reduction targets it had agreed to as part of its bailout agreement. That intensified fears that Greece could default on its debts, harming Europe’s economy.

The S&P 500 lost 32.19, or 2.9 percent, to 1,099.23. The Dow Jones industrial average fell 258.08 points, or 2.4 percent, to 10,655.30.

Indexes of smaller companies fell even more than the Dow and S&P. The Nasdaq composite slid 79.57, or 3.3 percent, to 2,335.83.

For the U.S., economists said the manufacturing and construction reports are consistent with an annual growth rate of 2 percent to 2.5 percent for July-September.

That would be an improvement from 0.9 percent in the first six months of 2011. But it wouldn’t be enough to reduce the unemployment rate, which is 9.1 percent.