ISM reported that the manufacturing sector expanded in April for the ninth consecutive month, and the overall economy grew for the 12th consecutive month. In a survey of the nation's supply executives (Manufacturing ISM Report On Business), ISM reported that economic growth was accelerating at a pace unequaled since June 2004.
The ISM survey also indicated that new orders and employment were growing as inventories were contracting. Respondents in the electrical equipment industries said finances continued to be tight and inventories were being slimmed down as a defensive measure. The food, beverage and tobacco industry reported increased sales and fabricated metals reported increasing demand from the automotive industry. All commodity prices were increasing in cost, and supplies were tight, except for the natural gas sector, where demand and prices continue to retreat. Caterpillar and Fairfield-based General Electric told Bloomberg News that they are now hiring to meet increased market demand. Caterpillar also announced it was planning to add back 9,000 of the 19,000 jobs it had cut in the past year.
Nevertheless, a sustained recovery will come only from growth in demand from the consumer sector, which accounts for 70 percent of American GDP. But there the outlook is brightening as well. According to economist Omair Sharif of RBS Securities in Stamford, "Consumption has come back more robustly than most people had anticipated, including employers." The Federal Reserve Bank of New York's general economic index climbed to 31.9, a ninth consecutive month of growth, up from 22.9 in March. Readings greater than zero demonstrate increases gains in the Empire State Index, which covers New York, northern New Jersey and southern Connecticut.
The U.S. Commerce Department reported that overall GDP grew at a 3.2-percent annual rate, which was slightly below expectations. But Commerce also reported that household spending increased at a 3.6-percent annualized rate, the highest in three years.
- Mitchell Young
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