This modest factory town with its humble wooden homes in the shadow of the Andes fell into despair last December. As Argentina suffered a financial meltdown, the local textile plant -- the largest source of jobs -- was forced to shut down, leaving hundreds of workers unemployed.

But a few months ago, hope returned to Las Piedras. Boosted by a devaluation of the Argentine peso, which made the town's thread more competitive with once-cheaper imports, the factory reopened its doors. The Pol Ambrosio Thread Factory, whose spinning of raw cotton into thread has, since the 1970s, provided for most of the 4,000 residents here, is now in the midst of an expansion that will mean 350 jobs when it is finished next month -- 30 more than when the plant closed 11 months ago.

As the lights are switched on at factories such as Pol Ambrosio, new hopes are surfacing in Argentina that the country is at the beginning of the end of a long, dark recession. Indeed, after the worst financial collapse to hit any Latin American nation in more than a generation, there are indications that the tattered economy in Argentina -- once the region's wealthiest country -- may finally be stabilizing and slowly turning a corner.

"We are looking at our relaunching of the factory as a positive sign that things are beginning to improve," said Teddy Karagozian, chief executive of TN & Platex, the textile firm that owns the Pol Ambrosio plant in Las Piedras, about 600 miles northwest of Buenos Aires. "You could say that Argentina before the crisis was at 10, and then suddenly, we fell to zero. Now, we're back at two. It's still bad, but at least things are starting to get a bit better."

The signs of life include a number of encouraging economic indicators. The Argentine peso, which has shed 71 percent of its value against the dollar this year, appears to have stabilized, and has strengthened in value over the past three months. Also, after a brutal recession that has left one of every two Argentines living below the poverty line of $2 a day, several key industrial sectors, including textiles and metalworks, are gradually reviving.

Preliminary figures from the Economy Ministry indicate the unemployment rate, which hit a record 22 percent in September after climbing steadily for almost five years during the recession, has topped out and may even drop in October.

Government statistics and anecdotal evidence from many businesses suggest a mild rebound in consumer demand. National sales tax revenues, after hitting a low in April of $256 million, rose to $400 million in October.

Argentina's banking system, once on the verge of collapse, also appears to be stabilizing. After almost two years of dramatic drops in deposits, government statistics indicate deposits are up from about $16 billion in June to about $16.7 billion in October.

Inflation, which had been rising to dangerous levels since January, sending the cost of basic goods soaring even as earning power dropped, also appears to be slowing. Inflation in October came in at 0.2 percent, the lowest rate in 10 months.

"I would say that not only is the Argentine economy stabilizing, but we are seeing a recovery after a very long period of recession," said Economy Minister Roberto Lavagna. "Of course it will take years to get back to where we were before the crisis, but I would say that we have turned an important corner and are finally on the right path."

Not everyone, however, is as optimistic.

Many economic analysts, foreign investors and business owners in Argentina and abroad say that rather than witnessing a sustained economic recovery, Argentina is instead enjoying only a brief reprieve from the financial meltdown triggered here last January after the largest debt default in history.

Economists agree the reopening or expansion of dozens of factories reflects a moderate increase in consumer spending. But analysts and business owners argue that does not really indicate a full-fledged recovery. Instead, they say, domestic wholesalers and retailers here simply no longer have access to the lines of credit needed to import everything from textiles to toothpaste. That, along with more competitive prices due to the peso devaluation, has increased demand for domestically made goods.

Many of the factories that are reopening, including the thread plant in Las Piedras, have been able to do so only by staging "mini-defaults" of their own. Most have been forced to declare bankruptcy and are using money that would have gone toward debt payments to relaunch business operations.

"We're fooling ourselves if we say we're in the middle of a recovery. It is far too early to declare victory over the crisis," said Patrick Binder, executive vice president of Inta Industria Textil Argentina SA, a Buenos Aires-based fabric company. "We still have serious, serious problems to overcome."

Those problems, many say, could still get worse. The caretaker government of President Eduardo Duhalde has been unable to reach agreement to restart aid from the International Monetary Fund. The talks have been tainted by vicious political infighting within Duhalde's ruling Peronist party ahead of spring elections here, which has stymied Duhalde's attempts to win a consensus on IMF reforms.

Buenos Aires also failed to make a key $805 million loan payment to the World Bank this month. And if Argentina does not make good on the payment by late January, the nation could be barred for years from further World Bank loans and put in the same category as such failed economies and financial pariahs as Sudan and Iraq.

Argentina's finance secretary, Guillermo Nielsen, explained at an economic meeting in Rio de Janeiro last week the gravity of Buenos Aires's talks with multilateral lenders. "If we don't have any help from [the multilaterals] by February, we will have a level of reserves where the economy is unmanageable, and by May, we will have no reserves."

Nevertheless, optimists point to other indicators of a recovery-in-the-making. Foreign investment in Argentina, nonexistent for almost a year, is starting to trickle in again.

Argentine labor costs -- the highest in Latin America until January, when the peso, once pegged to the U.S. dollar at a one-to-one rate, was devalued -- are now among the lowest in the region. One study published in the Buenos Aires daily newspaper Clarin showed that salaries now average about $230 a month, less than half the average salaries in Mexico, Uruguay and Chile.

As a result, Toyota and Volkswagen have recently announced expansions and call-ups of furloughed employees. Their aim is to use their Argentine plants to export cars and car parts. Two months ago, U.S.-based AOL Latin America moved at least 30 customer service and Internet content-design jobs to Buenos Aires from other parts of Latin America. The Spanish winemaker O. Fournier just invested $8.5 million in a new high-tech vineyard and winery in the western province of Mendoza.

"For us, Argentina seems less of a risk and more an opportunity right now," said Jose Manuel Ortega Fournier, the company founder. "It still has one of the most highly skilled and educated workforces in Latin America. If you're in this country as an investor for the long run, I still think Argentina is a good place to do business."

The textile industry here has particularly picked up. At least 10 factories have reopened nationwide. In Las Piedras, a small town in the poor northern province of Tucuman, the owners of the local thread factory decided to reopen the factory in May. They recalled their 320 workers after filing for bankruptcy, using funds to pay salaries and get machinery back into working order.

Among those happiest about that is Manuel Ruiz, 37, who for 16 years worked in quality control at the plant. When the plant closed last November, he briefly turned to cutting sugar cane to support his family of four. When the plant reopened and he got his $80-a-month job back, "I thought I was waking up from a nightmare," he said.

Argentines return to work at the Pol Ambrosio Thread Factory in Las Piedras after being recalled for the plant's reopening.