The American Institute of Supply Management (ISM) announced on February 1 that the domestic manufacturing index for January was 58.4, exceeding the experts' expectations of 55.5, the highest point since August 2004. However, as the unemployment rate remains high at around 10%, consumers are cautious about spending and the economic recovery is slow.
Manufacturing growth sharply Economists say that manufacturing growth in January was mainly driven by inventory replenishment. The data showed that due to the cleanup of US$33.5 billion in inventories by US companies, the real GDP (GDP) in the fourth quarter of 2009 increased by 5.7% year-on-year, the largest single-quarter gain in six years. Stephen Gallagher, chief US economist at Societe Generale in New York, said, "This fully shows that in the first half of 2010, US manufacturing will be strongly supported by inventory replenishment."
Boosted by strong manufacturing data, US stocks rose sharply on Monday, with the Dow Jones Industrial Average closing at 118.20 points at 10,185.53 points. The S&P 500 index closed at 15.32 points at 1,089.19 points. The Nasdaq index was up 23.85 points at 2,171.20 points. .
Slow recovery in the job market Michael Woolfolk, currency strategist at Bank of New York Mellon, believes that "the US manufacturing industry has shown a clear and powerful recovery, and the current drag on the overall economic recovery is still unemployment."
On February 1, US President Barack Obama submitted a 3.8 trillion budget to Congress. It plans to freeze some non-security sector government projects for three years and stop or cut 120 government spending projects to reduce the budget deficit. At the same time, in the budget, the measures to promote employment will cost 1 trillion US dollars, including tax cuts for SMEs, social safety net programs to ensure people's livelihood, increase investment in employment, and promote infrastructure construction.
The January ISM employment index rose to 53.3 from 50.2 in December 2009, a record high in three years. Economists expect the labor market to improve as manufacturing expands. Jay Mueller, senior investment manager at Wells Capital Management, said, "All data shows that the job market is expected to bottom out, but the unemployment rate is still high." ISM manufacturing survey director Norbert Ore said that the ISM employment index is better than the actual number of people employed. Sensitive response to the subtle changes in the direction of the job market. But he also said, "Unless necessary, business operators will not increase their employees. It is too early to predict the rapid recovery of the job market."
Economists expect that the monthly report on non-agricultural employment data released by the US Department of Labor this Friday (February 5) will show that the United States added 5,000 new jobs last month, which will be since December 2007. The second monthly increase, while in December 2009, the number of new unemployed was 97,000.
Consumer spending cautious US Department of Commerce data released on February 1st showed that although US consumer income levels rose, but consumer spending in December only moderately increased, only a slight increase of 0.2%, lower than expected, suggesting that consumers still at the end of the year Be cautious. In addition, excluding food and energy consumption, the personal consumption expenditure price index (PCEPI) rose by 1.5% in December, a month-on-month increase of 0.1%, in line with expectations.
Fed policymakers are paying close attention to the core personal consumption expenditure index and looking for signs of inflationary pressures. Gary Thayer, chief macro strategist at Wells Fargo, said: "The data shows that the Fed can still keep interest rates low for some time."
Manufacturing growth sharply Economists say that manufacturing growth in January was mainly driven by inventory replenishment. The data showed that due to the cleanup of US$33.5 billion in inventories by US companies, the real GDP (GDP) in the fourth quarter of 2009 increased by 5.7% year-on-year, the largest single-quarter gain in six years. Stephen Gallagher, chief US economist at Societe Generale in New York, said, "This fully shows that in the first half of 2010, US manufacturing will be strongly supported by inventory replenishment."
Boosted by strong manufacturing data, US stocks rose sharply on Monday, with the Dow Jones Industrial Average closing at 118.20 points at 10,185.53 points. The S&P 500 index closed at 15.32 points at 1,089.19 points. The Nasdaq index was up 23.85 points at 2,171.20 points. .
Slow recovery in the job market Michael Woolfolk, currency strategist at Bank of New York Mellon, believes that "the US manufacturing industry has shown a clear and powerful recovery, and the current drag on the overall economic recovery is still unemployment."
On February 1, US President Barack Obama submitted a 3.8 trillion budget to Congress. It plans to freeze some non-security sector government projects for three years and stop or cut 120 government spending projects to reduce the budget deficit. At the same time, in the budget, the measures to promote employment will cost 1 trillion US dollars, including tax cuts for SMEs, social safety net programs to ensure people's livelihood, increase investment in employment, and promote infrastructure construction.
The January ISM employment index rose to 53.3 from 50.2 in December 2009, a record high in three years. Economists expect the labor market to improve as manufacturing expands. Jay Mueller, senior investment manager at Wells Capital Management, said, "All data shows that the job market is expected to bottom out, but the unemployment rate is still high." ISM manufacturing survey director Norbert Ore said that the ISM employment index is better than the actual number of people employed. Sensitive response to the subtle changes in the direction of the job market. But he also said, "Unless necessary, business operators will not increase their employees. It is too early to predict the rapid recovery of the job market."
Economists expect that the monthly report on non-agricultural employment data released by the US Department of Labor this Friday (February 5) will show that the United States added 5,000 new jobs last month, which will be since December 2007. The second monthly increase, while in December 2009, the number of new unemployed was 97,000.
Consumer spending cautious US Department of Commerce data released on February 1st showed that although US consumer income levels rose, but consumer spending in December only moderately increased, only a slight increase of 0.2%, lower than expected, suggesting that consumers still at the end of the year Be cautious. In addition, excluding food and energy consumption, the personal consumption expenditure price index (PCEPI) rose by 1.5% in December, a month-on-month increase of 0.1%, in line with expectations.
Fed policymakers are paying close attention to the core personal consumption expenditure index and looking for signs of inflationary pressures. Gary Thayer, chief macro strategist at Wells Fargo, said: "The data shows that the Fed can still keep interest rates low for some time."
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