Further mixed economic data

Today saw the release of other economic data beyond initial jobless claims.  Specifically, the U.S. Department of Commerce’s construction spending figures and the Insitute of Supply Management’s manufacturing index.

Construction spending in February fell by 1.3%, its fourth consecutive monthly decline.  Additionally, January’s data were revised down to 1.4% past the initial estimation of down 0.6%.  Both commercial and residential real estate continue to suffer.

The ISM’s manufacturing index increased to 59.6 in March from 56.5 in February.  This index is peculiar in that any number above 50 represents growth.  March’s figure is the strongest since July 2004.

Analysis: Economic data continue to be mixed, neither providing a strongly positive or negative picture for the economy.  That construction remains weak is a sure sign that either credit remains tight or that prospective borrowers are reluctant to take on debt.  A full economic recovery will need a robust credit/debt market to support new business ideas and new consumer dreams.  The manufacturing data is very encouraging because the U.S. manufacturing sector has been battered for close to 40 years as increasing amounts of goods are made outside of the U.S.  While the ISM report is upbeat, the manufacturing sector is no longer the labor-intensive industry that it once was, meaning that even energetic hiring by employers in this sector does not dent the overall unemployment rate.

On balance, the economy seems still to be stabilizing, without much upward movement.  Each additional month of stabilization solidifies the recovery and makes it less likely that a “double-dip” recession will happen.

Importance grade: 5; neither statistic provides overwhelming evidence of anything other than an economy treading water.

Jason