Data Continue To Signal Weak U.S. Economy

By John S. McClenahen As if to confirm Federal Reserve Board Chairman Alan Greenspan's observation on Capitol Hill this week that "the future path of the economy is likely to come into sharper focus only gradually," the latest economic data offer virtually no support for the notion that the long-stalled U.S. economy is starting to pick up the pace. The manufacturing sector of the U.S. economy failed to grow in April for the second consecutive month, says the Institute for Supply Management (ISM), Tempe, Ariz. The group's closely watched manufacturing activity index fell to 45.4% in April from 46.2% in March, indicating that the economic sector is actually contracting. "The sector continued the lackluster performance that was evident in March, as new orders and production remained weak," says Norbert J. Ore, chairperson of ISM's manufacturing business survey committee and group director for strategic sourcing and procurement at Georgia-Pacific Corp. Meanwhile, initial claims for unemployment insurance fell to 448,000 last week, a decrease of 13,000 from the previous week's revised figure of 461,000, U.S. Labor Department data show. However, the number of initial claims remains well above the 400,000 mark, confirming that U.S. labor markets are not yet improving. "The message is that businesses have not yet regained enough confidence or motivation to slow layoffs and resume hiring," says Maury Harris, chief U.S. economist at UBS Warburg, New York. Indeed, the Labor Department's four-week moving average for initial claims actually increased last week, rising to 442,000 from 440,750 the week before. Productivity among U.S. manufacturers rose 2.1% from January through March of this year, a separate set of Labor Department statistics show, but that occurred as output declined 0.6% and hours worked fell 2.6%. And, finally, U.S. Commerce Department data show that the value of construction put in place during March of this year was at a seasonally adjusted annual rate of $868.5 billion, 1% below the revised February figure of $877.4 billion.

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