Pace of economic recovery remains unclear
Monday, November 1, 2010; 7:38 PM
With economic angst potentially driving the results of Tuesday's elections, indicators released Monday sent mixed signals about the pace of the U.S. recovery.
A report on manufacturing provided a glimmer of encouragement, but a separate government report suggested that consumer spending was stuck in the doldrums.
Manufacturing rose in October to its highest level since May, according to a monthly survey by the Institute for Supply Management. Activity in the sector reached 56.9 on the ISM index, up from 54.4 in September. In May, it was at 59.7.
The group said that 14 of 18 industries reported growth in October. Exceptions included the furniture business.
"It's not terrific, but it's still respectable, and enough to induce slightly more hiring," said Brian Bethune, chief U.S. financial economist at IHS Global Insight.
Separately, as voters prepared to elect a new Congress, a report from the Commerce Department showed no dramatic recovery in consumer income or spending.
Amid high unemployment, personal income declined 0.1 percent in September after increasing 0.4 percent in August. Excluding emergency government unemployment insurance benefits, which put more money in people's pockets in August, personal income was up by 0.1 percent.
Real personal consumption expenditures - which are adjusted for price changes - increased 0.1 percent in September, compared with 0.3 percent in August.
As far as personal spending was concerned, inflation was nearly flat in September, according to the Commerce report. A price index based on personal spending increased 01. percent in September. A month earlier, it was rising twice as fast.
That could give the Federal Reserve more leeway to buy assets in an effort to boost the economy.
Key stock market gauges rose significantly in morning trading Monday. But by the end of trading, those gains had nearly vanished, with the Dow Jones industrial average and the Standard & Poor's 500-stock index closing with slight gains.
The manufacturing report "signals a continuation of the recovery that began 15 months ago, and its strength raises expectations for growth in the balance of the quarter," Norbert J. Ore, ISM's chairman, said in a statement.