US sentiment brightens, factories rev up as US recovery digs in
Fri Jan 16, 4:37 PM ET Add Business - AFP to My Yahoo!
WASHINGTON (AFP) - Consumer sentiment soared to a four-year high and factories revved up as the US economic recovery took hold, data showed. The missing key, however, was jobs.
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Gathering economic strength raised spirits.
Sentiment among US consumers, whose spending accounts for two-thirds of US economic output, soared in early January, according to a University of Michigan survey.
The university's closely watched consumer sentiment index leapt to 103.2 points in early January -- the highest in more than three years -- from 92.6 in late December.
The key components of the Michigan index improved. An index of people's feelings about current conditions rose to 108.9 from 97.0 in December. An expectations index rose to 99.5 from 89.8.
Meanwhile, manufacturers, long the soft spot in the economy with 2.8 million jobs lost in the sector since July 2000, boosted output 0.3 percent in December, the Federal Reserve (news - web sites) said.
That lifted fourth quarter factory output to an annual growth rate of 6.6 percent -- the fastest since spring 2000.
"The manufacturing sector is becoming healthier by the month and confirming the staying power of the expansion," Naroff Economic Advisors president Joel Naroff said.
"No longer the weakest link, the nation's industrial heartland continues to move forward."
Despite busier factories, overall industrial output gained only 0.1 percent as comparatively mild December weather triggered a 1.4-percent slump in output by utilities. Mining production was steady.
But overall industrial production in November was revised upwards to show a gain of 1.0 percent, up from the original estimate of a 0.9-percent surge and the steepest rise since October 1999.
The figures appeared to confirm an earlier Institute for Supply Management survey showing December manufacturing activity accelerated to the quickest pace since 1983.
According to another survey by the Manufacturers Alliance, factory bosses believe the outlook in 2004 is the best in at least 31 years.
The Federal Reserve's Beige Book survey of the economy this week also pointed to a manufacturing rebound.
"All (the reports) confirm that manufacturing activity is growing and the recovery is widespread within the sector," said Manufacturers Alliance chief economist Daniel Meckstroth.
"A tax cut-aided consumer spending surge jumpstarted the manufacturing sector. What has kept this industrial recovery going, though, is a rebound in capital equipment spending and an acceleration in US exports aided by the weakening value of the dollar," he said.
But despite signs of solid economic growth, companies had yet to start hiring, Naroff said.
"The policy-making Federal Open Market Committee (news - web sites), which next meets January 27-28, was unlikely to raise interest rates until signs of a labor market recovery were evident, he said.
"With hiring soft and growth strong, we should see another quarter of impressive productivity gains and that means solid increases in earnings," Naroff said.
"If we could only get some jobs, all would be right with the economy." |
