- The Washington Times - Thursday, April 2, 2009

New economic reports on construction spending, manufacturing and pending home sales suggest the recession may be moving closer to a bottom.

But most analysts think the low point is still months away, with more bad news likely before the economy stabilizes and begins to rebound.

“I think the best that can be said right now is that the pace of decline has slowed, but we are still heading down,” said David Wyss, chief economist at Standard & Poor’s in New York. “Any recovery is still a work in progress.”

Mr. Wyss predicted that the recession, already the longest in a quarter-century, will last until September. But he said the decline in the gross domestic product in the current April-June quarter will probably be just half the 6.3 percent drop that was recorded in the final three months of last year.

The Commerce Department reported Wednesday that construction spending dropped 0.9 percent in February, the fifth straight monthly decline but less than the expected 1.5 percent decrease.

Meanwhile, a trade group’s measure of the health of manufacturing in March showed that key sector of the economy shrank for the 14th straight month.

The Institute for Supply Management said its manufacturing index rose to 36.3 last month from 35.8 in February. Even with the small increase, the index is stuck well below the reading of 50, which is the dividing line between growth and recession. The index hit a 28-year low of 32.9 in December.

“Manufacturing is still totally in the dumps, but it doesn’t seem to be sinking further,” said Joel Naroff, chief economist at Naroff Economic Advisors.

March proved to be another dismal month for U.S. automakers as low consumer confidence kept buyers away. General Motors Corp. led the slide, with a 45 percent drop in sales compared with March 2008.

Ford Motor Co. reported a 41 percent decline, and Chrysler LLC said sales plunged 39 percent.

The 0.9 percent fall in construction spending was led by a 4.3 percent drop in housing. That pushed housing construction to the lowest level in 11 years. Home builders have cut back sharply, but they face a rising glut of unsold homes as record mortgage foreclosures dump more properties on the market.

The manufacturing report, based on a poll of the Tempe, Ariz.-based trade group of purchasing executives, covers indicators including new orders, production, employment, inventories and prices. None of the 18 manufacturing industries grew in March, and new jobs are unlikely before next year.

The Commerce Department report showed nonresidential construction rose 0.3 percent in February. That was a rebound after a 4.3 percent drop in January that had been the biggest decline in 15 years.

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