- The Washington Times - Monday, March 1, 2004

ASSOCIATED PRESS

The economy is in recovery, a trio of reports released yesterday suggest, with manufacturing activity and consumer spending on the rise and construction spending solid yet slightly lower.

High energy prices and slow job creation are areas of concern for economists, but overall they remain upbeat about the nation’s financial condition.

“I think we’re actually in the early stages of an expansion,” said Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis.

“It doesn’t look like we’re firing on all cylinders yet and there are still some pockets of weakness,” Mr. Thayer conceded. “But the economy as a whole is looking considerably better than it did at this time last year.”

The nation’s manufacturing sector grew for the ninth consecutive month in February, the Institute for Supply Management reported yesterday, but the expansion was continuing at a slightly slower pace than expected.

The Commerce Department, meanwhile, said consumer spending and disposable income increased in January, while construction spending dipped that month for the first time since May.

“Overall, the numbers are very positive,” said John Silvia, chief economist at Wachovia Corp. in Charlotte, N.C.

The ISM’s manufacturing index was 61.4 in February, down from a revised 63.6 in January and below the 62 reading forecast by analysts. An index reading above 50 indicates expansion, while one below 50 indicates that manufacturing activity is contracting.

Mr. Silvia said the most important trends to note in the manufacturing data were in the areas of factory production and new orders, which have grown for 10 straight months.

The ISM report’s employment index rose to 56.3 from 52.9. However, while the employment index expanded for fourth months in a row, Mr. Silvia said he remains concerned about the actual number of jobs the U.S. economy is adding.

The economy has lost 2.2 million jobs since January 2001.

“I think you’re seeing a lot of manufacturing firms hiring a small number of people, but some big job losses in a few areas,” such as furniture, textiles and apparel, he said.

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