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Factories Finally Hiring As Growth Speeds Up In Aug. Chicago Survey By JED GRAHAM Investor's Business Daily
Feature Story
Tuesday, September 2, 2003
Chicago-area factories, racing to keep up with demand, added workers in August for the first time in 40 months, the National Association of Purchasing Management-Chicago reported Friday.
The association's business survey index rose to 58.9 from 55.9 in July, indicating factory activity expanded for the fourth straight month and at the fastest pace since May '02.
Separately, consumer spending in July rose a healthy 0.8% as disposable income surged 1.5%, largely thanks to tax cuts and despite no wage growth in the month, the Commerce Department said. Total income rose 0.2%.
These reports, adding to evidence of strong consumer spending in August, reflect an economy that's taking off in the third quarter on the back of monetary and fiscal stimulus.
"The summer is ending with an economic bang," wrote Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson. "It now appears that real GDP growth in the July-September quarter could rise above 6%."
Broad Factory Strength
The NAPM-Chicago's production gauge rose to 61.6 in Aug., up from 58.4 in July and the fifth straight reading above the break-even 50 level. New orders grew for the fourth straight month, though at a slightly slower pace, easing to 60.5 from 61.7. The backlog of orders rose to 51 from 49.4, growing for the first time since June '02.
Until August, Chicago factories had been meeting the increased demand by depleting their inventories and getting by with fewer workers. But the latest data offered some hope that those trends have run their course.
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