In a rare bit of good economic news, recent statistics for manufacturing and construction show growth — meaning that those sectors might help demand grow enough to stave off another recession, the second in four years. According to the Institute of Supply Management, “Economic activity in the manufacturing sector expanded in September for the 26th consecutive month” and at a much higher rate than in August. Likewise, the Census Bureau finds that construction spending was up 1.4% in August – more than it had been in July and relative to last year.
Together, these numbers paint a surprisingly optimistic picture of the current economic state of the US. Two of the biggest sectors of demand are starting to rev up after a shaky and politically unstable summer. Since some of the data lags on construction, this could also bode well for the September numbers as well, assuming it moves in conjunction with manufacturing. This is all partially driven by the fact that gas prices have gone down, reducing stagflationary pressures and improving the market for cars, perhaps sustaining modest growth for months to come.
On the other hand, this could be washed out by more concrete bad economic news. With the jobs bill likely to get stalled in Congress due to political considerations and Greek default looking more likely by the week, any progress that the country makes is, indeed, precarious. If anything, these numbers underscore the importance of passing something like the jobs bill. There’s clearly pent up demand, evidenced by the continued growth in the aforementioned sectors. The un- and under-employed just need a steadier income to catch up on expenditures — and nothing would do that better than a job bill targeted at just doing that.
Photo from stevendepolo via flickr.