June 04, 2003

A Ray of Business-Cycle Sunlight

One sign that second-quarter growth in demand may be stronger than first-quarter growth (which, alas, does not mean that employment will stop shrinking yet):

Service sector grows more than expected - Jun. 4, 2003: NEW YORK (CNN/Money) - Activity in the U.S. service sector heated up in May, the nation's purchasing managers said Wednesday, beating analysts' expectations. The Institute for Supply Management's reading of non-manufacturing activity came in at 54.5, compared with 50.7 in April. Any reading above 50.0 indicates growth in the sector. Economists, on average, expected a reading of 52, according to a Reuters poll...

Posted by DeLong at June 4, 2003 10:02 PM | TrackBack

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June 5, 2003

REUTERS

New orders for U.S. factory goods posted their largest drop in 17 months in April, the government said on Thursday in a report showing declines in many sectors and painting a far worse than expected picture of manufacturing.

Also, new claims for unemployment insurance were about 440,000 last week. Week after week, new claims are running between 425 and 450 thousand. The unemployed are staying unemployed for longer and longer. I know employment is a lagging indicator, but there seems to be a new ominous manner of weakness in the labor market.

Posted by: anne on June 5, 2003 09:51 AM

What is facinating is the persistent coexistence of clearly bad and clearly good news about the state of the business cycle. Manufacturing is weak and services are strong, while aggregate employment is sagging amid reports that productivity is very healthy.

The message is that there is some very fierce restructuring going on, and news from no one sector is going to define the direction of the economy.

Also, this restructuring is a good thing for job creation in the long run.

Posted by: Jim Harris on June 5, 2003 10:33 AM

"The message is that there is some very fierce restructuring going on, and news from no one sector is going to define the direction of the economy.

"Also, this restructuring is a good thing for job creation in the long run."

Perhaps, perhaps. There is reason to believe that service sector employment is becoming more and more prone to international competition. The sort of restructuring going on may last for a painfully long time. I am still worried.

Posted by: anne on June 5, 2003 10:52 AM

Good to know there'll be plenty of McDonald's jobs when I get laid off at the end of September.

Posted by: Ras_Nesta on June 5, 2003 02:01 PM
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