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Monday, November 03, 2003

Better Factory Output News From the US

The US manufacturing sector continues to improve, and this , of course, is a positive sign. Let's hope we see the same continued upturn in the employment news. I have my fingers crossed, but I'm not altogether convinced.

U.S. manufacturers cranked up output in October to the fastest level in nearly four years, according to a report on Monday that showed hard-hit factories enjoyed their best rebound since the 2001 recession. Separate government data showed construction spending hit record highs in September, suggesting that overall third-quarter growth, which came in at the strongest pace in two decades, could be revised even higher.

Taken together, the data showed the recent burst of economic activity maintaining momentum going forward and likely helping spur more job gains -- perhaps putting the final pieces in place for a full-fledged expansion. "Manufacturing has definitely made a turn and is in a recovery phase," said Paul Kasriel, head of economic research at Northern Trust in Chicago. The Institute for Supply Management said its October purchasing managers' index jumped to 57.0 -- the highest since January 2000 -- from 53.7 in September, beatings forecasts. Any reading above 50 points to growth in the sector, which makes up less than a fifth of the overall economy. A breakdown of the ISM survey's components pointed to strong growth going forward as well. New orders flooded in at the quickest pace in four years, rising to 64.3 in October, compared with 60.4 the prior month.

Backlogs of orders also rose, while the dollar's weakness and better demand from abroad boosted exports. Even as orders for goods kept streaming in, cautious factories cut back on already lean inventories. To meet demand, production will have to head higher. The burst of growth and production helped push the ISM employment index to its highest level in 10 months, to 47.7 from 45.7. Although that level means a slower pace of layoffs, some economists said it also suggests hiring by manufacturers.

Factories have suffered the most in the recession and stumbling recovery, losing more than 2.5 million jobs. Those layoffs have made manufacturers' complaints blaming China's currency policy for worsening their problems a hot political issue heading into next year's U.S. presidential election. October was the fourth straight month of expansion for manufacturing, and Norbert Ore, head of the ISM manufacturing business survey committee, noted that job gains usually come at this point in an expansion. "But this is not a typical recovery by any means," Ore said.
Source: Yahoo News

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