Love the good news! Here are 3 good signs in this article!
1. Manufacturing in the U.S. expanded
2. Stocks Climb
3. Rising Orders
May 3 (Bloomberg) — Manufacturing in the U.S. expanded in April at the fastest pace since June 2004, indicating the world’s largest economy accelerated as it entered the second quarter.
Stocks gained as the supply management’s report showed expanding production and a gauge of factory employment at the highest level since 2005. Parker Hannifin Corp. is among companies benefiting from a global manufacturing resurgence that may soon spark the hiring needed for a sustained economic expansion.
“This speaks to the tremendous health of the manufacturing sector and should be consistent with further gains in hiring,” said Carl Riccadonna, a senior economist at Deutsche Bank Securities Inc. in New York. “The strength in economic activity in the first quarter has carried into the second quarter, and in fact, is probably accelerating.”
Readings greater than 50 in the supply management group’s index signal expansion and today’s report marks a ninth consecutive month of growth. The factory index was projected to rise to 60, based on the median forecast of 76 economists in a Bloomberg survey. Estimates ranged from 57 to 65.
Stocks Climb
Warren Buffett’s defense of Goldman Sachs Group Inc. and an airline merger also helped propel stocks. The Standard & Poor’s 500 Index rose 1.3 percent to close at 1,202.26. The 10-year Treasury note declined, pushing the yield up 3 basis points to 3.69 percent at 4:13 p.m. in New York. A basis point is 0.01 percentage point.
Manufacturing is rebounding globally. Europe’s factories grew last month at the fastest pace since June 2006, while Australian manufacturing growth jumped to the highest level since May 2002, other reports showed today.
A manufacturing index based on a survey of euro-area purchasing managers increased to 57.6 from a March reading of 56.6, London-based Markit Economics said. A gauge of factory performance in Australia surged 9.3 points to 59.8 in April, the Australian Industry Group and PricewaterhouseCoopers said.
Consumer spending rose 0.6 percent in March after a 0.5 percent gain that was more than initially estimated, Commerce Department figures showed. Incomes increased 0.3 percent, the first gain this year.
Consumer Spending
The figures show American consumers, whose spending accounts for 70 percent of the economy, are gaining confidence in the recovery. Their purchases in the first quarter rose at a 3.6 percent annual rate, the fastest in three years, the Commerce Department reported last week.
Construction spending unexpectedly increased in March, propelled by gains in state and local government projects, a Commerce Department report showed. The 0.2 percent rise followed a 2.1 percent drop in February.
The ISM’s production index jumped to the highest since January 2004. The new orders index increased to a three-month high, while inventories at factories and at their customers declined.
“Production is barely keeping pace with demand, and the prospects for solid manufacturing growth in the coming months remain quite good,” Michael Feroli, chief U.S. economist at JPMorgan Chase in New York, said in an e-mail to clients.
The factory employment index increased to the highest since level since January 2005. Manufacturing payrolls probably expanded for a fourth straight month, according to the median forecast in a Bloomberg survey before a May 7 report from the Labor Department.
Federal Reserve
Federal Reserve policy makers said last week that the labor market is showing signs of improving, and kept interest rates near zero to ensure the expansion becomes well-rooted.
Employers increased payrolls again in April, economists surveyed by Bloomberg forecast before the Labor Department’s report, which may also show the jobless rate held at 9.7 percent.
The ISM’s supplier delivery gauge, a measure of the time it takes to receive goods, fell to 61.3 from 64.9 the prior month. The index of prices paid rose to 78 from 75.
Flush with profits, businesses are spending more on equipment. Business investment rose at a 13 percent annual rate in the first quarter after a 19 percent surge at the end of 2009.
Rising Orders
Parker Hannifin’s total orders were up 23 percent in the first quarter and its international industrial orders surged 42 percent from a year earlier, the maker of hydraulic equipment reported last month.
“In most of our markets, we continue to see a more consistent picture of improving year-over-year trends,” Don Washkewicz, the Cleveland-based company’s chief executive officer, said in an April 20 conference call. “North America continues to show signs of recovery.”
Efforts to stabilize inventories contributed 1.6 percentage points to growth in the first quarter after a 3.8 point boost in the prior there months, the Commerce Department’s report on gross domestic product showed last week.
