By SCOTT STODDARD, INVESTOR’S BUSINESS DAILYÂ
U.S. manufacturing expanded for the 16th straight month in November and private employers added the most jobs in three years, among several reports Wednesday suggesting the recovery is slowly gathering steam.
The Institute for Supply Management’s manufacturing index fell 0.3 point in November to 56.6, just above views and still above 50, signaling expansion. The orders, exports and job subindexes eased but also remained well above 50.
Also Wednesday, private firms hired a net 93,000 workers in November, the most since November 2007, according to ADP Employer Services. That was much better than expected. Friday’s Labor Department report is expected to show nonfarm public and private payrolls rose by 130,000, the second straight gain
The economy “continued to improve” from early October to mid-November, the Federal Reserve said Tuesday in its beige book, a snapshot of conditions in the central bank’s 12 districts.
Manufacturing expanded in almost all districts, the beige book found, adding that demand grew for nonfinancial services such as health care and consulting. Consumer spending also “tended to be positive,” boding well for the holiday shopping season.
Factory gauges in China, India and Europe also showed stronger growth last month.
Stocks soared on the upbeat economic data along with tempered concerns about Europe’s debt woes. The Dow rose 2.3%, the S&P 500 2.2% and the Nasdaq 2%. The 10-year Treasury yield shot up 17 basis points to 2.97%, a four-month high.
“We’re seeing growth across more and more sectors,” said Mark Vitner, a Wells Fargo economist. But he added, “Hiring appears to be picking up, but it’s not a case where we’re likely to see it pick up so much that the unemployment rate will drop dramatically.”
Friday’s job report will likely show the jobless rate held at 9.6% last month. ADP sees it staying above 9% through next year.
The auto, tourism, agriculture and energy sectors expanded in recent weeks, the beige book noted.
U.S. automakers on Wednesday reported double-digit domestic sales gains in November. GM’s (GM) core brand sales rose 21% vs. a year earlier. Ford’s (F) jumped 24% and Chrysler’s 17%. Honda (HMC), Hyundai and Nissan (NSANY) all did well.Â But Toyota (TM), the world’s largest, continued to struggle following its massive recalls earlier this year: Its U.S. sales fell 3.3%.
But housing markets remain “depressed” and commercial real estate activity weak, the Fed said.
Construction spending rose 0.7% in October, the Commerce Department said Wednesday, defying forecasts for a 0.5% drop. But home improvement, not new- home building, led the way.
“Without improvement in the housing sector, I just can’t see the economy coming back all that strongly,” Vitner added.
The U.S. economy grew at a 2.5% annual rate in Q3, up from a 1.7% pace in Q2 but much slower than a typical expansion out of a sharp recession. The Fed sees more modest growth next year.
From Investor’s Business Daily