November 03, 2003

A Piece of Good News for the Fourth Quarter

A piece of good news for the fourth quarter: consumer demand may be easing off, but manufacturing production is accelerating:

ISM manufacturing index surges - Nov. 3, 2003: NEW YORK (CNN/Money) - U.S. manufacturing activity accelerated in October, the nation's purchasing managers said Monday, in a report that surpassed Wall Street expectations. The Institute for Supply Management (ISM) said its index of manufacturing activity rose to 57 from 53.7 in September. It was the fourth straight month the ISM index was above 50, a number that indicates expansion in the sector.

Economists, on average, expected the ISM index to rise to 55.8, according to Briefing.com. "This is the best report that we have seen in quite some time in terms of the overall strength of manufacturing," said Norbert Ore, chair of the ISM Manufacturing Business Survey Committee. "The picture continues to improve, and it appears that manufacturing will finish 2003 on a very positive note, assuming the recent trend continues."...

Posted by DeLong at November 3, 2003 08:17 AM | TrackBack

Comments

If these trends continue, won't the Federal Reserve start to come under pressure to begin the process of raising rates? But this would seem to be a very risky thing to do in an election year, with net job creation not in hand, and Greenspan knows that the Bush family blames him in part for H.W.'s defeat. The political pressures on Greenspan will be intense.

Posted by: BobNJ on November 3, 2003 08:36 AM

____

And the only question remaining is how much this recovery will cost.

Posted by: Charles on November 3, 2003 08:39 AM

____

If these trends continue, won't the Federal Reserve start to come under pressure to begin the process of raising rates? But this would seem to be a very risky thing to do in an election year, with net job creation not in hand, and Greenspan knows that the Bush family blames him in part for H.W.'s defeat. The political pressures on Greenspan will be intense.

Posted by: BobNJ on November 3, 2003 08:41 AM

____

If demand decreases, while manufacturing is increasing...doesn't that mean that we may well end up with a glut of products that no one's buying ?

Posted by: Patrick (G) on November 3, 2003 08:54 AM

____

The PMI deliveries index -- the percent experiencing delivery delays -- is one on the
best financial market sell signal I know.
Rates rise & stocks fall when it is above 52.5.

The fact that it is an election year has never had any impact on Fed policy & that is an objective fact, not an opinion.

Interestingly, the manuf employment index did not improve. Moverover, within the index the jobs
increased & the jobs loss continued to tell the same story that the problem is more a lack of jobs being created rather than jobs being eliminated. The PMI for services showed a significant job improvement last month
when both the hiring increasing rose and the
lay-off percent fell.

Posted by: spencer on November 3, 2003 10:43 AM

____

Looks like 5% GDP growth this quarter. The only negative is employment, but manufacturing employment is NOT coming back to America. We need to spur other employment sources.

Posted by: anne on November 3, 2003 11:38 AM

____

I believe Spencer is reading the record on the Fed rightly. The only thing that happens when rates need to rise in an election year is that Fed officials look over their shoulders and hope elected officials don't mess things up by pretending to have influence over the Fed. The Fed may not always have been apolitical (Dick Nixon seems to have thought he had the Fed wired), but there evidence is that the Fed has been pretty scupulous most of time.

Posted by: K Harris on November 3, 2003 12:06 PM

____

http://www.nytimes.com/2003/11/03/national/03CND-BUSH.html?hp

Bush Uses Good Economic News to Press Tax Message
By DAVID STOUT

President Bush campaigned on the economy and other domestic issues today in Alabama, where he called for permanent tax relief and said the entrepreneurial spirit is "what America's all about."

Mr. Bush used an appearance at a family-owned crane company in Birmingham to deliver his message, in a speech that touched only briefly on the campaign in Iraq and did not specifically mention the loss of 16 American soldiers on Sunday in a downed helicopter.

"It is essential for those politicians in Washington to know that individual income tax relief is incredibly important for job creation, not only because it stimulates demand but because it provides a vital boost in the arm for the small-business sector," the president said to applause....

Posted by: anne on November 3, 2003 12:38 PM

____

Anne (you're great), capital intense commodity manufacturing might not be coming, but what about mass custom articles? Clothes made to fit laser measurements, at near mass market prices? There's likely to be more local mfg possible with lower cost custom tools becoming more available.
Admittedly, not the same as massive car factories.

Posted by: Tom Grey on November 4, 2003 02:57 AM

____

Post a comment
















__