• Economy keeps humming

    Reports just out from the government and independent researchers alike reinforce a sunny view of the economy
    May 2, 2006
    2 min read
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    Reports just out from the government and independent researchers alike reinforce a sunny view of the economy.

    First off, the manufacturing segment accelerated its growth in April, according to the Institute for Supply Management (ISM). The ISM index was 57.3 in April, compared with 55.2 in March. Any reading above 50 indicates growth.

    In April new orders grew at a decelerating rate, order backlogs grew at a slower rate, inventories grew for the first time in 12 months and customers’ inventories were rated as “too low.”

    “The manufacturing sector grew at a faster rate during April as production and employment showed significant strength,” stated Norbert J. Ore, chair of ISM’s manufacturing business survey committee. “While many members indicate that business is good, they still have major concerns about the impact of higher prices for energy and industrial commodities.”

    In its own report, the U.S. Dept. of Commerce reported that disposable personal income (after-tax wages and income) expanded 0.8% in March. Personal consumption expenditures (consumer spending) increased 0.6%. This is important because consumer spending alone accounts for 70% of the total U.S. economy.

    The National Assn. of Credit Management noted that in April its combined Credit Manager’s Index dropped 0.6 to 57.5. Any reading above 50 indicates economic growth and for the first time since July 2004, all sub-indexes were above 50. The manufacturing index rose 0.5.

    “As far as credit managers are concerned, the economy is firing on all cylinders,” stated chief economist of credit insurer Euler Hermes ACI Dan North.

    About the Author

    Terrence Nguyen

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