U.S. manufacturing expanded at a slower pace, while consumer spending increased, underlining the Federal Reserve’s forecast for a “modest” pace of economic growth in coming months.
The Institute for Supply Management’s factory index dropped to 54.4 in September from 56.3 the prior month, the Tempe, Arizona-based group said today. Readings greater than 50 signal growth. Consumer purchases increased 0.4 percent in August for a second month, more than forecast by economists.
Manufacturing, which has led the recovery from recession, is cooling as companies such as Cisco Systems Inc. see signs of slower growth and limited hiring. Further gains in household spending are likely to be restrained as unemployment lingers near a 26-year high. New York Fed President William Dudley today said more monetary easing will probably be required unless the outlook for jobs improves.
“It’s a recovery in fits and starts,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “It’s keeping the scales tilted in the direction of more action from the Fed.”
Stocks rose after the consumer spending report bolstered optimism in the recovery, while Treasury two-year note yields fell to the lowest on record on bets the Fed will restart large- scale asset purchases to spur growth.
The Standard & Poor’s 500 Index gained 0.4 percent to 1,146.24 at the 4 p.m. close in New York. The two-year note yield was little changed at 0.42 percent after touching a record low of 0.4066 percent.
Unemployment Benefits
The gain in personal spending exceeded the 0.3 percent increase projected by the median forecast of economists surveyed by Bloomberg News. Incomes were up 0.5 percent, the biggest advance this year, propelled by the resumption of extended and emergency unemployment benefits.
A 0.2 percent increase in inflation-adjusted spending was driven by a 0.8 percent rise in nondurable goods such as food and clothing. The gain was the biggest since February. The figures bolster the view that the extended benefits may have helped unemployed Americans make ends meet.
After the worst recession since the 1930s, the economic recovery that began in June 2009 has been led by manufacturing as exports climbed, business investment improved and inventories were replenished. The rebuilding of stockpiles has since slowed.
John Chambers, chief executive officer of San Jose, California-based Cisco Systems, last week said economic conditions appeared “a little bit bumpy.”
‘More Normal’
Cisco, the world’s largest maker of networking equipment, “saw the market returning to more normal growth rates,” he said in an interview on Bloomberg Television’s “InBusiness With Margaret Brennan.” Most chief executives Cisco talks to are projecting economic growth of 2 percent or less, he said, “and that means they’ll probably spend appropriately and also hire appropriately.”
At the same time, “Asia’s still going strong and Europe is holding up remarkably well,” Chambers said. China’s manufacturing expanded in September at the fastest pace in four months, a separate report showed today, while growth in European manufacturing slowed.
“The pace of economic recovery is likely to be modest in the near term,” the Fed said Sept. 21 after its policy meeting. “Business spending on equipment and software is rising, though less rapidly than earlier in the year.”
The New York Fed’s Dudley said today that the outlook for employment is “unacceptable” and that the central bank has options to add stimulus without major drawbacks. The jobless rate is projected to average at least 9 percent through 2011, according to a Bloomberg survey last month.
Dudley Comments
“Further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long,” Dudley, who serves as vice chairman of the Fed’s policy-setting Open Market Committee, said in a speech in New York.
Dudley’s remarks are one of the clearest signs that policy makers will start a second round of unconventional monetary easing as soon as the FOMC’s next meeting Nov. 2-3. Fed Chairman Ben S. Bernanke said yesterday that the central bank has a duty to aid the U.S. economy as the jobless rate holds near 10 percent.
President Barack Obama last month proposed a package of $180 billion in business tax breaks and infrastructure spending to help spur employment and as his approval rating suffers. The economy is a top issue for voters in the November congressional elections, and polls show Americans are increasingly skeptical of Obama’s performance.
Orders, Production
The ISM’s measures of new orders and production dropped in September to the lowest levels since June 2009. The employment gauge fell to a six-month low and the index of export orders was the weakest this year.
Other economic reports today showed that construction spending unexpectedly climbed and a gauge of consumer sentiment declined less than forecast.
Construction outlays rose 0.4 percent in August as an increase in government stimulus spending for public works overcame a drop in homebuilding, according to figures from the Commerce Department.
The Thomson Reuters/University of Michigan final index of consumer sentiment fell to 68.2 in September from 68.9 the previous month. The gauge was projected to decline to 67, according to the median forecast in a Bloomberg survey, and compares with a preliminary reading of 66.6 issued last month.
To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.net; Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net.
http://jodnet.blogspot.com
The Institute for Supply Management’s factory index dropped to 54.4 in September from 56.3 the prior month, the Tempe, Arizona-based group said today. Readings greater than 50 signal growth. Consumer purchases increased 0.4 percent in August for a second month, more than forecast by economists.
Manufacturing, which has led the recovery from recession, is cooling as companies such as Cisco Systems Inc. see signs of slower growth and limited hiring. Further gains in household spending are likely to be restrained as unemployment lingers near a 26-year high. New York Fed President William Dudley today said more monetary easing will probably be required unless the outlook for jobs improves.
“It’s a recovery in fits and starts,” said David Resler, chief economist at Nomura Securities International Inc. in New York. “It’s keeping the scales tilted in the direction of more action from the Fed.”
Stocks rose after the consumer spending report bolstered optimism in the recovery, while Treasury two-year note yields fell to the lowest on record on bets the Fed will restart large- scale asset purchases to spur growth.
The Standard & Poor’s 500 Index gained 0.4 percent to 1,146.24 at the 4 p.m. close in New York. The two-year note yield was little changed at 0.42 percent after touching a record low of 0.4066 percent.
Unemployment Benefits
The gain in personal spending exceeded the 0.3 percent increase projected by the median forecast of economists surveyed by Bloomberg News. Incomes were up 0.5 percent, the biggest advance this year, propelled by the resumption of extended and emergency unemployment benefits.
A 0.2 percent increase in inflation-adjusted spending was driven by a 0.8 percent rise in nondurable goods such as food and clothing. The gain was the biggest since February. The figures bolster the view that the extended benefits may have helped unemployed Americans make ends meet.
After the worst recession since the 1930s, the economic recovery that began in June 2009 has been led by manufacturing as exports climbed, business investment improved and inventories were replenished. The rebuilding of stockpiles has since slowed.
John Chambers, chief executive officer of San Jose, California-based Cisco Systems, last week said economic conditions appeared “a little bit bumpy.”
‘More Normal’
Cisco, the world’s largest maker of networking equipment, “saw the market returning to more normal growth rates,” he said in an interview on Bloomberg Television’s “InBusiness With Margaret Brennan.” Most chief executives Cisco talks to are projecting economic growth of 2 percent or less, he said, “and that means they’ll probably spend appropriately and also hire appropriately.”
At the same time, “Asia’s still going strong and Europe is holding up remarkably well,” Chambers said. China’s manufacturing expanded in September at the fastest pace in four months, a separate report showed today, while growth in European manufacturing slowed.
“The pace of economic recovery is likely to be modest in the near term,” the Fed said Sept. 21 after its policy meeting. “Business spending on equipment and software is rising, though less rapidly than earlier in the year.”
The New York Fed’s Dudley said today that the outlook for employment is “unacceptable” and that the central bank has options to add stimulus without major drawbacks. The jobless rate is projected to average at least 9 percent through 2011, according to a Bloomberg survey last month.
Dudley Comments
“Further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long,” Dudley, who serves as vice chairman of the Fed’s policy-setting Open Market Committee, said in a speech in New York.
Dudley’s remarks are one of the clearest signs that policy makers will start a second round of unconventional monetary easing as soon as the FOMC’s next meeting Nov. 2-3. Fed Chairman Ben S. Bernanke said yesterday that the central bank has a duty to aid the U.S. economy as the jobless rate holds near 10 percent.
President Barack Obama last month proposed a package of $180 billion in business tax breaks and infrastructure spending to help spur employment and as his approval rating suffers. The economy is a top issue for voters in the November congressional elections, and polls show Americans are increasingly skeptical of Obama’s performance.
Orders, Production
The ISM’s measures of new orders and production dropped in September to the lowest levels since June 2009. The employment gauge fell to a six-month low and the index of export orders was the weakest this year.
Other economic reports today showed that construction spending unexpectedly climbed and a gauge of consumer sentiment declined less than forecast.
Construction outlays rose 0.4 percent in August as an increase in government stimulus spending for public works overcame a drop in homebuilding, according to figures from the Commerce Department.
The Thomson Reuters/University of Michigan final index of consumer sentiment fell to 68.2 in September from 68.9 the previous month. The gauge was projected to decline to 67, according to the median forecast in a Bloomberg survey, and compares with a preliminary reading of 66.6 issued last month.
To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.net; Shobhana Chandra in Washington at schandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net.
http://jodnet.blogspot.com
0 التعليقات
Post a Comment