Perhaps The Cautious Optimists Are Right About U.S. Economy

By John S. McClenahen Three newly released sets of data encompassing factory orders, productivity and services suggest the U.S. economy is moving out of its recent "soft spot" and onto firmer ground. In contrast to a 2.4% drop in September, new orders for U.S. manufactured goods -- not including semiconductors -- rose 1.5% in October to $322.6 billion, says the U.S. Commerce Department. Although not quite as much as the 1.7% gain economists generally expected, new orders did move back into positive territory. Revised numbers from the U.S. Labor Department show that productivity in the non-farm business sector of the U.S. economy increased 5.1% during this year's third calendar quarter, more than a full percentage point higher than the originally reported 4%. Manufacturing productivity, while still very strong, was revised downward to 5.5% from 5.9% as newer numbers showed output slightly less than first calculated and the number of hours worked slightly higher. Business in the non-manufacturing sector of the U.S. economy increased for the 10th consecutive month in November, rising to 57.4% on the index compiled by the Institute for Supply Management (ISM), Tempe, Ariz. The November mark was well above the 54% that economists generally expected. "Combined with [November's] more modest improvement in the manufacturing ISM [index], this jump reassures that the soft spot in the economy is becoming history," claims Maury Harris, chief U.S. economist at UBS Warburg LLC. New York.

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