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Production picks up in US after 18 months
By Chris Reese |
September 2, 2009, Wednesday
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Print Edition
Print Edition
THE manufacturing sector in the United States grew last month for the first time in more than a year and a half, while pending home sales surged to a two-year high in July, adding to mounting evidence the longest economic slowdown since the Great Depression is ending.
The Institute for Supply Management said its index of national factory activity rose to 52.9 last month from 48.9 in July. The median forecast of 78 economists surveyed by Reuters was for a reading of 50.5.
A reading above 50 indicates expansion in the manufacturing sector. The last time the index showed growth in the sector was in January 2008 with a reading of 50.8. August was the highest since a reading of 52.9 in June 2007.
The manufacturing and housing data pushed US stocks higher, and the Nasdaq rose more than 1 percent.
"Both reports are encouraging readings. I'm particularly encouraged by new orders and spread between new orders and shipments. The manufacturing recession is over. This is not necessarily a one-month event. This suggests manufacturing activity will be picking up," said Jonathan Basile, an economist with Credit Suisse in New York.
Regional US surveys have shown business picking up steam last month, though employment remained weak, consistent with fears the US could be in for a "jobless recovery."
Increased hiring is seen as critical to getting a consumer-led recovery under way. The US unemployment rate was 9.4 percent in July. Economists expect a report on Friday to show it rose to 9.5 percent last month.
Also yesterday, the National Association of Realtors said its pending home sales index, based on contracts signed in July, rose 3.2 percent to 97.6, the highest level since June 2007, from 94.6 in June.
The Institute for Supply Management said its index of national factory activity rose to 52.9 last month from 48.9 in July. The median forecast of 78 economists surveyed by Reuters was for a reading of 50.5.
A reading above 50 indicates expansion in the manufacturing sector. The last time the index showed growth in the sector was in January 2008 with a reading of 50.8. August was the highest since a reading of 52.9 in June 2007.
The manufacturing and housing data pushed US stocks higher, and the Nasdaq rose more than 1 percent.
"Both reports are encouraging readings. I'm particularly encouraged by new orders and spread between new orders and shipments. The manufacturing recession is over. This is not necessarily a one-month event. This suggests manufacturing activity will be picking up," said Jonathan Basile, an economist with Credit Suisse in New York.
Regional US surveys have shown business picking up steam last month, though employment remained weak, consistent with fears the US could be in for a "jobless recovery."
Increased hiring is seen as critical to getting a consumer-led recovery under way. The US unemployment rate was 9.4 percent in July. Economists expect a report on Friday to show it rose to 9.5 percent last month.
Also yesterday, the National Association of Realtors said its pending home sales index, based on contracts signed in July, rose 3.2 percent to 97.6, the highest level since June 2007, from 94.6 in June.
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