Thursday, November 18, 2010

Growth in the U.S. Manufacturing Sector Continues to Exceed Expectations

The index of U.S. leading indicators increased for the 4th consecutive month. The Conference Board’s gauge of the outlook for the next three to six months climbed 0.5% for a second consecutive time, capping the biggest back-to-back gains since earlier in the year. Six of the 10 indicators that comprise the leading index were positive in October. Dr. David Krause, AIM program director said, “The news about the U.S. economy continues to be better than expected. I felt the negative tone of the recent elections was too pessimistic – and the current economic reports are showing that 2011 is likely to be stronger than expected.”

It was also reported today by the Federal Reserve Bank of Philadelphia that general economic growth in their region grew robustly and exceeded the most optimistic forecast in a Bloomberg News survey. Manufacturing in the Philadelphia region expanded in November at the fastest pace this year as orders, sales and employment surged, indicating U.S. and overseas demand will keep fueling growth. This is counter to the weaker than expected NY region manufacturing data reported last week.

Krause added, “I think the U.S. economy is accelerating and we are going to see the unemployment rate decline in the first half of 2011. The major economic weakness is behind us and employers are less pessimistic. The stock market is typically a good leading indicator of future economic activity and it has been strong the past three months. Additionally, the near record-low interest rates will help consumers repair their damaged finances. I think we're finishing with the pessimists talking about a double dip recession.”

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