November 2008

Manufacturing sector sees light

The U.S. and world economies are not disintegrating. We are contracting. There is other good news too.

The composite index of leading indicators increased 0.3% in September, to 100.6, the first increase in five months, according to preliminary estimates by The Conference Board.

Six of the 10 indicators that make up the leading index increased in September. The positive contributors, beginning with the largest positive contributor, were real money supply, index of consumer expectations, interest rate spread, index of supplier deliveries, manufacturers' new orders for nondefense capital goods, and manufacturers' new orders for consumer goods and materials.

The negative contributors, beginning with the largest contributor, were building permits, average weekly initial claims for unemployment insurance (inverted), stock prices, and average weekly manufacturing hours.

"The latest data suggest that conditions in the non-financial economy are not falling apart. Data on hand reflect a contracting economy, but not one in free fall," said Ken Goldstein, labor economist at the Conference Board.

The composite index of coincident indicators fell 0.5% in September, to 106.0, also from 100 in 1992. Industrial production had the largest negative contribution.

However, part of output decline reflected plant shutdowns due to two hurricanes and the strike at Boeing.