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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (9897)	5/20/2004 1:48:34 PM
From: Proud_Infidel	Respond to of 25522

Factories Cool Off, But Jobs Coming Thursday May 20, 1:39 pm ET By Victoria Thieberger NEW YORK (Reuters) - Factories in the U.S. Mid-Atlantic region took a breather in May after a recent sizzling pace, but the prospects for American manufacturing remain bright, a closely watched survey showed on Thursday. A separate report showed the number of Americans filing initial claims for jobless benefits grew more than expected last week, falling short of economists' forecasts. Despite the slight setback indicated in the factory report and the gain in jobless claims, economists said that taken together, they showed the economic rebound is still on track. "This will fuel optimism that manufacturing payrolls can post further gains after rising by a combined 37,000 in the last three months," said HSBC Chief Economist Ian Morris. The Philadelphia Federal Reserve Bank said its gauge of regional industry dropped to 23.8 in May from 32.5 in April, far below economists' forecasts of a dip to 32.0. But that still showed an expanding factory sector, for the 12th straight month, and hiring prospects improved to the best level since April 1973. Although the increase in national factory jobs has been modest, it has ended a three-year drought, when layoffs dominated. ANOTHER INFLATION WORRY The stock market was mixed on the weaker-than-expected report, while the Treasury market continued its advance. There was a sour note in the manufacturing survey though, with a sharp increase in two measures of prices flashing a warning signal on inflation. The prices paid measure surged to 59.6, its highest since August 1988, from 51.9 in April, while a measure of prices that manufacturers receive increased to its highest level since February 1989. "The recovery in manufacturing is maturing, in that while the pace of growth may be stabilizing or even moderating, firms are now hiring and pushing through price hikes," said RBS Chief Economist Stephen Stanley. Financial markets are especially sensitive to news of price pressures after the broad U.S. consumer price index came in well above expectations in the past three months. Worries of higher prices have already cemented financial market expectations that the Federal Reserve is on the cusp of raising official interest rates to keep a lid on inflation. Futures markets are pricing in the first increase in the 1.0 percent federal funds rate in June. In another signal that could concern Fed policy-makers, the regional survey found a high 39 percent of the factories surveyed said they are experiencing shortages or delayed delivery of critical raw materials -- the sort of bottlenecks that reflect a booming economy and potential price pressures. "We got a large share of those firms mentioning steel and steel-related products. We've known about those for a long time, followed by construction -- wood and lumber products," said Philadelphia Fed economist Michael Trebing. JOBLESS CLAIMS EDGE UP The Labor Department said first-time claims for state unemployment benefits rose 12,000 to 345,000 in the week ended May 15. While the jobless numbers were not as low as expected, economists said the broad outline of an improving labor market was intact. "Claims were a little higher, but they were not out of line with the recent range. I don't think it reflects a fundamental change. I think the labor market is still improving," said Mark Vitner, an economist at Wachovia Securities. While initial claims rose, the four-week moving average of filings, which smooths out weekly fluctuations to provide a better picture of underlying trends, fell 2,750 to 333,500. The numbers complement the country's increasingly encouraging jobs picture after the U.S. economy added 625,000 new jobs in April and March. A third report on Thursday from a private research firm showed soaring gas prices and even the prospect of a Fed rate rise are not dampening the U.S. economic revival. The Conference Board's index of leading indicators, a gauge of activity over the next three to six months, rose 0.1 percent in April to 115.9 -- slightly below Wall Street forecasts.