As I was surfing through economic headlines this evening, this jumped out at me:
U.S. manufacturing activity surges
Closely watched measure of manufacturing activity stronger than expected in October.
November 3, 2003: 11:17 AM ESTNEW YORK (CNN/Money) - U.S. manufacturing accelerated in October, the nation's purchasing managers said Monday, in a report that surpassed most forecasts on Wall Street.
The Institute for Supply Management (ISM) said its index of manufacturing activity jumped 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."
Now to be honest, I never got past the "surges", as I was unaware that the ISM report was in fact due out today. After surfing over to their website for the official report, I was confronted with a somewhat less "rosy" analysis:
ISM's Backlog of Orders Index indicates that order backlogs improved again in October. However, manufacturing Employment continued to decline in October as the index remained below the breakeven point (50 percent) for the 37th consecutive month. ISM's Prices Index indicates that manufacturers experienced higher prices for the 20th consecutive month. New Export Orders grew in October for the 22nd consecutive month, while October's Imports Index grew for the 12th consecutive month.Comments from purchasing and supply managers seem to be lagging the data. The indexes indicate significant improvement, but the purchasing and supply managers' comments do not reflect this trend. It appears that some industries are not yet experiencing the upturn.
Hmmmm...that doesn't sound so great... Time to read more of the CNN report:
The ISM noted, however, that some parts of the manufacturing sector have yet to improve, based on comments from individual purchasing and supply managers that were still cautious."It appears that some industries are not yet experiencing the upturn," the ISM report said....
The employment index rose to 47.7 from 45.7 in September, indicating manufacturers were still cutting jobs, but at a slower pace.
"We're still seeing job cuts in manufacturing, and it's going to stay that way for some time," said Robert Brusca, chief economist at Native American Securities in New York."
[Note: Yes, there is a large financial institution run by Indians which is oft quoted in mainstream media outlets.]
So the news is really not all that different from recent months; A significant Keynesian upsurge based upon consumer spending due to one-time middle-class tax credits, but which fails to motivate businesses to increase employment versus fall back on an upswing in productivity.
A lot of Administration apologists assert that critics want nothing more than to see the economic "recovery" fail; to be honest, seeing that in this household we've been unemployed all but six months out of the past twenty-one, I personally would like nothing more than to see a true upturn in the economy. Unfortunately, I see this recent upswing as a house of cards built on a foundation of sand, to mix metaphors, and suspect that as the stimulus which was infused late this summer winds down, we'll see a return of the "double" (or is it now "triple"?) dip in employment, whether or not GDP continues to surge.