US factory growth fastest in 20 years

[adios]

A similar story occurred in the WSJ today.

Fastest growth in 20 years for US factories hmmm...

Comprehensive jobs report by US Labor Dept. on Friday we'll ssee if there's any improvement in the employment situation.

US factory growth fastest in 20 years

US factory growth fastest in 20 years

www.chinaview.cn 2003-12-02 14:48:22

BEIJING, Dec. 2 (Xinhuanet) -- The Institute for Supply Management said its manufacturing index jumped to 62.8 in November, the highest since December 1983, from 57.0 in October. That easily beat the forecasts of Wall Street economists.

With growth so strong and new orders flooding in, factories hired workers for the first time in 37 months, according to the survey. The ISM figures also suggested little slowdown ahead, with factory owners struggling to meet demand for goods.

"It's pretty eye-popping. If you look at the components, everything is very positive," said Stephen Stanley, senior markets economist at RBS Greenwich Capital.

That good news means government data to be released on Friday could show an even bigger rise in November payrolls than the 135,000 gain forecast by economists, after an increase of 126,000 in October.

"People have really underestimated the speed and improvement in the labor markets," Stanley said.

The stunning ISM figures gave a lift to stocks, helping push up the S&P 500 and Dow Jones industrial average to 18-month highs. The dollar, however, failed to capitalize on the data and remained close to record lows against the euro.

Treasuries prices suffered on expectations that such robust growth and renewed hiring would bring closer the day the Federal Reserve begins to lift benchmark short-term interest rates, now at a 45-year low of 1 percent.

The yield on the two-year note, the most sensitive to Fed policy, hit its highest level in a year before recovering late. Still, Fed officials have emphasized in recent weeks that strong growth is needed for at least a few quarters to soak up excess production and labor capacity.

Not only has the hard-hit manufacturing sector rebounded strongly, but two of the mainstays of the economy during its sluggish recovery the past two years, housing and construction, also remain robust.

Construction spending in October posted its fourth straight record level, surging 0.9 percent and also easily beating forecasts.

Overall construction spending rose to a seasonally adjusted annual rate of $922.0 billion in the month from an upwardly revised $913.5 billion in September, the Commerce Department (news - web sites) said. Analysts polled by Reuters had expected a 0.6 percent rise. Private residential construction spending rose 2.2 percent to a record $484.1 billion from $473.6 billion.

That suggests the economy's third-quarter 8.2 percent growth rate, also the fastest in two decades, may not slow as much as economists had originally thought.

While strong consumer spending is expected to ease as support from tax cuts fades, other areas like manufacturing will now likely pick up the slack.

"Now it's time not just for pulling weeds but to plant a new garden. A much greater degree of confidence is very much a factor here," said Norbert Ore, who heads the manufacturing survey for ISM.

A breakdown of the ISM figures showed factories rebuilding inventories for the first time since January 2000 -- near the peak of the boom. Such inventory stocking is expected to buttress overall growth this quarter and early next year.

As the ISM new orders index has jumped 14.1 points since August to a 20-year high of 73.7, the production index has not risen as quickly, said Drew Matus, an economist at Lehman Brothers. That suggests manufacturing "is likely to expand at reasonably high rates for the next few months," Matus said. (Agencies)





A separate report showed the economy's rebound and rock-bottom interest rates have kept the housing market humming.

The average price for U.S. homes rose 5.61 percent in the July-to-September quarter compared to a year earlier, according to the Office of Federal Housing Enterprise (news - web sites) Oversight, the agency that regulates mortgage financing giants Fannie Mae and Freddie Mac.

That broke a four-quarter streak of slowing home price appreciation, and only four of the 220 metropolitan areas tracked in the survey showed home price declines, compared with 19 in the second quarter. (Additional reporting by Pedro Nicolaci da Costa and Richard Leong in New York and Mark Felsenthal in Washington, DC)

[Boris]

Given the time lag for gov't economic policies to take effect I think we should all stand up and cheer for Bill Clinton and all he has done for economy. C'mon Tom, let's hear you give a hip, hip hooray for Slick Willie!

[adios]

I don't think I've ever trashed Slick Willie that I can remember regarding his economic policies. Clinton deserves his share of the credit for the economic expansion of the 90's (as well as other things like welfare reform and keeping medicare/medicaid spending in check) but I guess according to you I should really give the credit to Reagan.

[brad]

so u think uemployed americans should move 2 china?