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United States News Title: U.S. Economy: Manufacturing in U.S. Expands for Seventh Month March 1 (Bloomberg) -- Manufacturers increased production and employment in February, signaling factories are leading the nation out of recession as the new year begins. The Institute for Supply Management’s factory index fell to 56.5 from January’s 58.4, which was a five-year high, figures from the Tempe, Arizona-based group showed. The measure exceeded 50, signaling expansion, for a seventh straight month. The group’s jobs gauge rose to the highest level since January 2005. Combined with a report showing consumer spending in January climbed more than anticipated, the figures signaled the expansion that began late last year will be sustained into 2010. The need to rebuild inventories and invest in new equipment may keep factories hiring, prompting the rebound in employment to ripple through the rest of the world’s largest economy. “It’s a business-led recovery,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. “Manufacturing is going to be a part of it in a noticeable way and you’ll see it leak down” to other industries, he said. Stocks climbed for a second day after the reports. The Standard & Poor’s 500 Index rose 0.9 percent to 1,114.26 at 12:33 p.m. in New York. The dollar also rose and Treasury securities were little changed. Consumer spending, which accounts for about 70 percent of the economy, rose 0.5 percent in January, the fourth straight gain, figures from the Commerce Department showed. More Spending “An increasing number of American households, and this is true in my district and I think around the country, are regaining some confidence in their job prospects, their income prospects and that’s leading to a gradual expansion of consumer spending,” Federal Reserve Bank of Richmond Pressident Jeffrey Lacker said today in an interview with Bloomberg News. The risk of a double-dip recession has diminished and is “relatively minor,” he said. Abiel Reinhart, an economist at JPMorgan Chase & Co. in New York, said spending may grow at a 2 percent to 2.5 percent annual rate this quarter after increasing at a 1.7 percent pace in the final three months of 2009. Incomes rose 0.1 percent, the report also showed, less than anticipated and restrained by declines in interest and dividend payments. Wages and salaries climbed 0.4 percent, the most since April. The ISM’s factory index compared with a median forecast of 57.9, according to 66 projections in a Bloomberg News survey. Estimates ranged from 55 to 60.7. Manufacturing accounts for about 12 percent of the economy. More Employment The group’s employment index increased to 56.1 from 53.3. Manufacturers boosted payrolls by 11,000 workers in January, the first gain in three years, the Labor Department said last month. Factory payrolls probably fell by 20,000 in February, due in part to snowstorms on the East Coast, according to the median estimate of economists surveyed by Bloomberg before the Labor Department’s next report due March 5. While the ISM’s measures of production and new orders fell, order backlogs reached their highest level since May 2004 and delivery times lengthened. Part of the strengthening in demand has been from overseas customers. European manufacturing expanded for a fifth month in February. A factory index for the 16-nation euro region increased to 54.2, the highest since August 2007, London-based Markit Economics said. Global Expansion China’s manufacturing grew at a slower pace in February, according to HSBC Holdings Plc and Markit Economics. Their factory index fell to 55.8 from a January reading of 57.4. Factory orders in the U.S. have been increasing after companies pared inventories last year by a record $120 billion. Efforts to rebuild depleted stockpiles contributed 3.88 percentage points to a fourth-quarter growth rate of 5.9 percent that was the strongest in more than six years, the Commerce Department said last week. Investment in equipment and software increased at an 18 percent annual rate in the fourth quarter, the most since 2000, the Commerce Department said last week. Santa Clara, California-based Applied Materials Inc., the world’s largest producer of chipmaking equipment, forecast sales and profit that topped analysts’ estimates as semiconductor companies begin to increase orders. “What we have to see in the second half of the year is an expansion of capacity additions to a broader group of customers,” Chief Financial Officer George Davis said in an interview Feb. 17. “We’ve built some conservatism for our outlook. It won’t take much expansion for us to meet that outlook.” Job Growth Needed The economy still requires job growth to spur consumer spending, which is forecast to grow 2 percent this year, according to economists surveyed by Bloomberg last month. Employers in February probably reduced payrolls by 50,000 workers after 20,000 job cuts the prior month, economists surveyed by Bloomberg forecast the government’s monthly payroll report will show this week. A third report today showed construction spending fell in January for a third straight month, led by declines in commercial projects. The 0.6 percent decrease followed a 1.2 percent drop the previous month, Commerce Department figures showed. Commercial building fell 1.4 percent, swamping a 1.1 percent gain in home construction.
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more tears from the usual suspects.
Being a Republican means you get to choose your own reality.
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