News/Blog
Good News Friday: Upside Surprises
Three economic indicators surprised on the upside this week, a signal that, although the economy has slowed since the spring, it continues to slog ahead in positive territory.
· This morning, the Bureau of Labor Statistics reported an increase of 67,000 net new private sector payroll jobs added in August while June and July numbers were revised higher by 66,000. Total payroll jobs, the so-called headline number, fell by 54,000 as 121,000 public sector jobs were eliminated, of which 114,000 were temporary Census jobs. The 67,000 new private sector jobs added last month beat expectations for 30,000. The unemployment rate ticked up slightly to 9.6 percent from 9.5 percent in July as 550,000 more people said they were looking for work. The labor market continues to expand although well below the level necessary to bring down unemployment.
· The closely watched Institute for Supply Management’s purchasing managers index rose from 55.5 to 56.3 for August, a sign that the manufacturing sector continues to expand at a moderate pace following an inventory correction cycle that inflated growth earlier this year. This occurred as businesses had to restock after depleting their inventories during the recession.
· Consumer spending, while not robust, is holding its own. The Commerce Department reported that spending rose 0.4 percent in July, the fastest pace in four months, while Thomson Reuters reported that back-to-school sales rose a better-than-expected 3.3 percent in August thanks in part to discounting.
Taken together, these indicators suggest that a double-dip recession is not imminent. Look for the economy to muddle through the remainder of 2010 followed by stronger growth in 2011.
-Bob Bach, Grubb & Ellis Senior Vice President, Chief Economist
