USA Today
WASHINGTON — Economic optimists have something to cheer. A measure of U.S. business other than manufacturing rose in February for the first time in three months in what some economists say may be the first glimmer of a recovery.
The National Association of Purchasing Management’s non-manufacturing business index rose to 51.7 from January’s 50.1, the group said yesterday. A reading above 50 means business is expanding and below 50 means it is contracting. January’s close call had analysts concerned that last month’s number would confirm the worst: the economy was sliding into recession.
Instead, yesterday’s number offered hope that the downturn had bottomed out, particularly as it came only days after a moderately encouraging report by the association on the manufacturing sector.
The two reports give some analysts reason for optimism.
"At first blush, this looks like good news," said Ralph Kauffman, who chairs the non-manufacturing survey committee. The two surveys taken together "give me a feeling that maybe we’re starting to turn around here."
The two reports by the National Association of Purchasing Management are key because they cut across a wide swath of the economy. Non-manufacturing businesses represent about 80 percent of the economy while manufacturing represents about 20 percent.
Increasingly, non-manufacturing — including such service businesses as utilities, banks and hospitals — has been bolstering the rest of the economy when manufacturing has been weak, says Dana Saporta, economist at Stone & McCarthy Research Associates.
What is unclear is whether February’s upward tick is a temporary move in a notoriously volatile index or the beginning of a longer-term recovery.
Dana Corp.’s Spicer Driveshaft division in Ohio underscores the uncertainty. Its orders for driveshafts were lackluster in December, picked up a little in January and then fell again last month. The decline wasn’t much, says Kelly Moore, marketing manager at Dana, but it was enough to concern executives. Now the company expects orders will be better this month and pick up in earnest by June.
"There aren’t big glimmers of hope right now that the slowdown is over," she says. "But the big declines may be done. It looks like we’re holding steady."
Meanwhile, the Chicago Federal Reserve Bank unveiled a new index yesterday for tracking the economy. Its National Activity Index culls 85 existing monthly indicators from five broad categories — from unemployment to industrial production.
"We’ve been using an index like this for the last two years in our own analysis and it has been a good summary measure of the economy," says Charlie Evans, vice president and economic advisor at the Chicago Fed.
The index read minus-0.55 for January, Evans says. That’s a level consistent with an economy growing below its potential but not in recession. "We’re about where we were during the last soft landing of 1994," Evans says. "We’re growing a little slower but not by a lot."
[back to top] |
