NEWS: US MANUFACTURING LAYOFFS PICK UP SPEED
Factory Growth Picks Up as Do Layoffs
Tuesday September 2, 11:11 am ET
By Eric Burroughs
NEW YORK (Reuters) - U.S. manufacturing growth accelerated in August, with factory owners hiking production to its highest level since the peak of the 1990s boom but also stepping up layoffs in the latest report to show a jobless economic rebound.
The Institute for Supply Management said on Tuesday its August manufacturing index rose to 54.7, the highest since December last year, from 51.8 the prior month.
The index's components showed the latest burst of factory activity, which makes up less than a fifth of the U.S. economy, as likely to pick up steam in coming months.
New orders for goods poured in at a faster pace, while backlogs of orders and export orders rose. As a result, manufacturers boosted production to the highest level since June 1999.
The upbeat news from the hard-hit factory sector underscored expectations for the overall economy to grow by as much as 5 percent to 6 percent this quarter in what could be its best performance since the height of the 1990s boom.
Stocks fell and safe-haven Treasuries cut their losses after the headline figure failed to meet the more bullish hopes of some investors. The dollar also cut some of its gains.
"This is good news for the economy as a whole, as it currently appears as if we can continue to expect further improvements in months to come," said Drew Matus, an economist at Lehman Brothers, in a note to clients.
"Unfortunately, this is likely to do little for the labor situation in this sector," he said.
The economy's rebound has yet to translate into hiring, mainly due to businesses keeping costs in line to improve productivity and profit margins.
The employment index fell to 45.9 from 46.1 the prior month, showing nearly three years of layoffs that have led to almost 3 million job losses in manufacturing.
For the factory workers who have suffered the most in the recession and bumpy recovery, the layoffs may continue. The news came as Treasury Secretary John Snow visited Beijing to press top officials about China's managed currency policy that U.S. manufacturers have blamed for stealing U.S. jobs.
"We have to see significant growth in manufacturing before industries will rehire," said Norbert Ore, head of the ISM manufacturing survey committee.
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