Data Point to Slow Pace of Healing in Economy
Growth in the manufacturing sector picked up in August, a sign the economy is resisting the global economic chill although a rise in new jobless claims last week pointed to a still-sluggish labor market.
Reuter’s repored that financial information firm Markit said on Thursday (Aug. 23) its “flash” index for U.S. manufacturing edged up a half point to 51.9 in August. A reading above 50 indicates expansion.
That was still some of the weakest growth in the factory sector in the last three years, reinforcing the view that U.S. economic growth will pick up in the second half of the year but remain lackluster.
“The U.S. economy is slowly turning the corner,” said Robbert Van Batenburg, head of global research at Louis Capital Markets in New York.
The reading, based on a survey of purchasing managers, beat expectations and rose despite sluggish overseas demand for American goods.
Still, the modest improvement was not enough to dissuade investors’ bets on more monetary stimulus from the Federal Reserve. U.S. government debt prices rose, although stocks slumped on Wall Street amid signs of further weakness in the global economy.
Many economists think the Fed could unveil a new bond buying program to prop up economic growth as soon as its next meeting Sept. 12-13, although an improvement in hiring this month could make that less likely.
The data on initial jobless claims suggested employers remain cautious about adding staff.
The Labor Department said initial claims for state unemployment benefits rose 4,000 last week to a seasonally adjusted 372,000.
“Jobless claims continue to indicate … a sluggish labor market,” said Peter Cardillo, an economist at Rockwell Global Capital in New York. “The numbers also strengthen the hand of the Fed to aid the economy with more stimulus.”
However, Cardillo and other economists said the slow pace of healing in the labor market doesn’t necessarily point to immediate action by the Fed.