How's that song again 'Born to be alive..alive',Ooops 'Born to shop'.
Hi Lee:
I know you have seen this already but repetition is in order for those
who missed it and might be interested in this sort of thing.
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''If there were Olympics in consumption, the U.S. would
probably win gold, silver and bronze hands down,'' Ed Yardeni,
Deutsche Bank..
U.S. Economy: Factory Outlook Brightens, Spending Up (Update2)
(Adds closing markets in 6th paragraph)
Washington, Feb. 1 (Bloomberg) -- U.S. factory production
rebounded last month after a four-month slump and consumer
spending and home building accelerated in December, fortifying an
economic expansion that shows no signs of quitting.
The National Association of Purchasing Management's
production index rose to 53.1 in January from 46.8 in December --
the first increase in four months and the highest level since
May. Readings above 50 mean more manufacturers reported expanded
production than those saying they're cutting back.
Consumer spending rose 0.8 percent in December, fueled by
higher auto purchases, after a 0.2 gain in November, the Commerce
Department said. December's 0.5 percent rise in personal income
also topped the previous month's 0.4 percent rise. And
construction spending registered its seventh straight monthly
increase in December, paced by gains in home building.
''We have such a virtuous-circle dynamic right now,'' said
John Ryding, senior economist at Bear Stearns & Co. ''Tight labor
markets force people to increase efficiencies, so they invest in
these new technologies.'' Because much of that technology is
produced in the U.S., that in turn creates jobs, boosts incomes
and fuels consumer spending, he said.
Computer and automakers have benefited from the boom. Dell
Computer Corp. shares rose 7 7/8 today to 107 7/8, bringing its
gain in the last four weeks to 47 percent, on estimates that its
shipments surged in last year's final quarter and a possible
stock split. General Motors Corp. shares are up almost 28 percent
since the first of the year.
Expansion Won't Quit
U.S. Treasury bonds slumped on the up-arrow signs for the
economy, which almost guarantee Federal Reserve policy-makers
won't announce a cut in the overnight bank lending rate at the
conclusion of a two-day meeting on Wednesday. The benchmark 30-
year bond fell 1 1/2 points, pushing up its yield 9 basis points
to 5.17 percent. Stocks were mixed. The Dow Jones Industrial
Average fell 13 points, or 0.1 percent, to close at 9345.70. The
Nasdaq Composite Index rose 4 points or 0.2 percent.
The economy grew at a 5.6 percent annual rate in the final
three months of 1998 -- the fastest quarterly pace in two years -
- and 3.9 percent for the year, the government reported Friday.
That growth came with only a 1.0 percent rise in inflation, the
smallest increase since 1949, in the GDP price deflator.
December's increase in spending was aided by a 4.2 percent
increase in purchases of durable goods, Commerce Department
figures showed. GM, Ford Motor Co. and others automakers reported
December U.S. sales ran at a 17.2 million annual rate, a 7
percent increase from the same month of 1997 -- and the highest
of any month since 1986.
''If there were Olympics in consumption, the U.S. would
probably win gold, silver and bronze hands down,'' Ed Yardeni,
Deutsche Bank Securities' chief economist in New York, said at
the World Economics Forum in Davos, Switzerland. ''We were born
to shop.''
Setting Records
The separate construction report from the Commerce
Department showed that overall spending rose 1.7 percent in
December, topping the 1.0 percent increase a month earlier. All
segments showed gains, with residential construction rising by
the largest dollar amount.
''Right now, there's nothing in the cards to suggest that
consumers won't continue to spend at the rate they have been,''
said Richard Yamarone, an economist at Argus Research Corp. in
New York. ''A fully employed labor force, near-zero inflation and
low interest rates have prompted great growth in housing and
autos -- two large engines of the economy.''
The rebound in NAPM's manufacturing report lends credence to
analyst and investor expectations that the U.S. economic
expansion will keep setting records. The current expansion
entered its 95th month today -- the longest in peacetime and
closing in on the all-time record of 106 months set in the 1960s
during the Vietnam War.
NAPM's overall manufacturing activity index rose to 49.5
last month from 45.3 in December -- the first increase in four
months and the highest reading since June. ''It looks like the
manufacturing recession is close to over,'' said Christopher Low,
an economist at First Tennessee Capital Markets in New York.
Topped Expectations
<i?While the closely watched gauge of U.S. manufacturing topped
Wall Street expectations, January marked the eighth straight
month the NAPM index was below 50, which means the number of
manufacturers who said business deteriorated was greater than the
number of those saying it improved.
The NAPM's index of prices paid rose to 32.5 in January from
31.1 during December, indicating more companies reported price
increases during the month. The new orders index, a gauge of
current demand, rose to 51.3 in January from 46.4 during
December.
The suppliers delivery index, a gauge of pent-up demand, rose
to 50.9 in January from 48.7 during December. The inventories
index, another gauge of pent-up demand, rose to 42.3 in January
from 41.9 during December.
The employment index, a gauge of hiring plans and labor
market conditions, rose to 44.8 in January from 40.9 during
December. The export orders index, a gauge of Asian and other
international demand, rose to 49.8 in January from 44.7 during
December.
The rise in the export orders index was the third in a row.
That's further confirmation on a possible end to the weakness in
trade that reached U.S. shores following the advent of recessions
last year in Japan and in emerging markets around the world.
(Courtesy:BloombergBusinessNews)
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