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Business

May 4, 2014

Frigid winter gives way to a warming economy

(Continued)

“It is clear that many Americans headed out to the shopping mall and automobile dealerships in March after staying home and cranking up the heat for the first two months of the year,” said Chris Christopher, an economist at IHS Global Insight.

Spending is up partly because Americans earned a bit more, and confidence has improved from the bleak winter months. Incomes rose 0.5 percent in March, the government said, the most since August.

Consumer confidence has nearly returned to pre-recession levels, according to two surveys by the Conference Board and the University of Michigan. Americans are increasingly optimistic about economic growth and hiring.

Also Thursday, a private survey showed that manufacturing activity accelerated in April for a third straight month. The Institute for Supply Management said its manufacturing index rose to 54.9 in April from 53.7 in March. Any reading above 50 indicates expansion.

Measures of export orders and hiring rose, and new orders increased at a healthy pace. Factories are recovering after many had been shut down early this year by snowstorms and freezing weather.

Businesses are also investing more in machinery and equipment after cutting back in those areas in January and December. Business orders for manufactured goods jumped in March, the government said last week.

All told, the positive news has led most economists to forecast a strong rebound in economic growth — to a 3.5 percent annual rate in the current April-June quarter. And growth should reach nearly 3 percent for the full year, up from 1.9 percent in 2013, they expect.

That would likely fuel more job growth. Economists predict that employers added a sizable 210,000 jobs last month.

The number of people seeking unemployment benefits has reached roughly pre-recession levels. That suggests that layoffs remain low.

Even the slumping housing market has reported some good news this week. Signed contracts to buy existing homes rose in March for the first time in nine months. That holds out the hope of higher sales in the months ahead.

And construction spending ticked up in March, fueled partly by more home and apartment-building.

“We continue to see momentum in the economy picking up,” said Michael Brown, an economist at Wells Fargo.

 

 

 

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