Posted on Thu, Nov. 19, 2009
Reports suggest economy’s slowly rebounding
By Bob Fernandez
INQUIRER STAFF WRITER
A spate of reports today from Philadelphia and across the nation pointed to an economy that, finally, is stabilizing and beginning to turn around, though slowly and weakly.
The manufacturing sector in the Philadelphia region continued healing in November, as business conditions improved for the fourth consecutive month and hiring plans appeared to have become firmer, the Philadelphia Federal Reserve Bank said in one of the reports, its monthly Business Outlook Survey.
Separately, the bank's president, Charles I. Plosser, said he was "less fearful" than he was three months ago of a double-dip recession, in which the economy would decline again.
The economy is "on the mend" and may strengthen in coming quarters, he said during an appearance in Singapore.
That will force the Fed to "struggle and debate" on the right time to raise interest rates to prevent inflation. Plosser, long a hawk in fighting inflation, has agreed with his Fed colleagues in recent months on the need to keep rates low for now to help end the economic downturn.
In other reports today, a private business group said its forward-looking index increased for the seventh straight month, signaling national economic growth into 2010.
Also, the U.S. Labor Department said new claims for unemployment benefits held steady in the latest week, a sign that layoffs may be letting up. Supporting that view, Pennsylvania officials said the state's jobless rate was unchanged in October at 8.8 percent. Still, that was 3 percentage points higher than a year ago.
Plosser, in his remarks in Asia, acknowledged weakness in the job market, saying there was no answer yet to when employment would turn around and adding that the economy was not yet "as strong as we would like it to be."
In the Philadelphia Fed's manufacturing survey, the broadest measure of activity rose to 16.7 this month from 11.5 in October. A zero reading indicates no growth in manufacturing, and a negative reading indicates a contraction or recession.
The survey's current employment index rose to about zero in November from minus 6.8 in October, meaning employment growth is flat.
Most measures in the survey improved, although some stayed in negative territory, indicating continuing concerns.
Factory capacity use - how much of their production capability factories are using - remains an issue.
About three of every five companies responding to the survey said their factories were operating at less than 70 percent of capacity. That compares with 8 percent of respondents who said factories operated at that low rate before the recession. Higher capacity rates lead to higher profits and employment.
In the day's other reports:
Looking ahead. The Conference Board's index of leading economic indicators rose 0.3 percent in October, slightly less than the 0.4 percent gain economists had forecast.
Jobless claims. The number of Americans filing new claims for unemployment insurance was unchanged at 505,000 in the week ended Saturday, the Labor Department said. But before the recession began in December 2007, fewer than 350,000 new claims were filed each week.