Manufacturing up; Dow briefly passes 8,000 mark
Friday, April 3, 2009
WASHINGTON -- Fresh signs that factories are coming back to life and a bank chief executive officer's encouraging outlook fueled more hopes Thursday that the economy may soon emerge from the cellar, briefly lifting the Dow Jones industrials over 8,000 for the first time in two months.
The job market, among the last to turn around in an economic recovery, remains weak, though. New claims for unemployment last week were worse than forecast, and today's reading on how many jobs the nation lost in March is widely expected to be grim.
The Commerce Department said orders for manufactured goods rose 1.8 percent in February, reversing six straight monthly declines and beating estimates of another drop.
"There is now some solid evidence that the period of economic free-fall is now behind us, that the next step will be a slower rate of decline," said Nigel Gault, chief U.S. economist for consulting firm IHS Global Insight.
Gault predicted in an e-mail that the economy will bottom out in the second half of the year, cautioning that he did not believe the economy was yet ready to grow again.
Economists expect Friday's jobs report to show U.S. employers cut 654,000 jobs in March, with the unemployment rate rising to 8.5 percent from 8.1 percent, according to a survey by Thomson Reuters. Some economists estimate as many as 750,000 jobs lost for March.
Gault expects the unemployment rate eventually to rise to 10 percent before reversing.
Still, recent economic reports have indisputably been more positive. Earlier this week, pending home sales and construction spending both came in better than expected, and there have also been signs shoppers are loosening the death grip on their wallets.
"Some of the recent economic indicators have been more encouraging than they were in the winter, when every indicator pointed in the same direction: straight down," said Stuart Hoffman, chief economist at PNC Financial Services Group.
But layoffs continue to pile up. Last week alone, the Labor Department said, initial claims for unemployment insurance rose to a seasonally adjusted 669,000, the highest in a generation and up from the previous week.
While initial jobless claims reflect recent layoffs, the monthly jobs report takes into account new hires and calculates a net change.
Traditionally, the job market doesn't pick up until well after a recovery starts. The stock market, on the other hand, generally bottoms out before the economy does, and stocks have been on a steady march higher for three weeks.
Bank of America CEO Ken Lewis also bolstered the financial markets when he told CNBC that the recession is "getting close to the bottom."