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Just What Is It With The U.S. Economy?

U.S. manufacturing executives can be excused for being cautious -- even confused -- about their sector of the economy and the U.S. economy as a whole.

On Tuesday and Wednesday of this holiday-shortened workweek, the Conference Board said that consumer confidence, which had been falling in 2005, was on the rise in May, and the Institute for Supply Management reported that the manufacturing sector of the economy just barely grew in May, reaching its lowest level since June 2003.

On Thursday, The U.S. Commerce Department said new orders for manufactured goods increased nine-tenths of a percentage point in April, more than twice what economists generally anticipated a week ago; the Labor Department reported U.S. manufacturing productivity rose at a seasonally adjusted annual rate of 4.4% during the first quarter of 2005, half a percentage point higher than previously estimated; and the Labor Department said first-time claims for unemployment insurance jumped by 25,000 last week, apparently, according to Merrill Lynch & Co., a result of temporary auto industry layoffs.

Also on Thursday, the Manufacturing Alliance/MAPI, an Arlington, Va.-based business and public policy research group, reported that most of the 27 manufacturing industries it surveyed "are past the peak growth rate" they will achieve in the current business cycle.

The bottom line: Real growth in manufacturing and the rest of the U.S. economy will be slower this year than last, but how much slower seems subject to weekly revision. Manufacturing industrial production grew 4.8% last year; Manufacturers Alliance is projecting 3.4% for 2005. The U.S. economy advanced 4.4% in 2004; Merrill is forecasting 3.2% for 2005.

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