Small Gems of Good News About the Economy

Consumer spending, manufacturing index up

Manufacturing plant in Nevada

We all know that many sectors of the economy are continuing to get worse. However, there are a couple of key economic indicators that are ever-so-slightly getting better.

Manufacturing and consumer spending have both shown small increases this year.

Manufacturing taking a turn?

Despite many predictions to the contrary, manufacturing sector activity rose in February. It was the second straight month the sector’s index inched up after 11 months of decline.

The Institute for Supply Management reported a manufacturing index of 35.8 for February. It’s a tiny difference from the 35.6 reading in January, but it’s going in the right direction.

“Everyone is so pessimistic from first-quarter reports, so even when we see a modest gain, it’s a glimmer of hope,” said Sam Bullard, an economist at Wachovia.

Consumers spending slightly more

Another important economic indicator that saw a small gain was consumer spending. Analysts  had predicted a gain, but consensus said consumer spending went up 0.4 percent in January.

Saving is becoming a bit more trendy.

Now that final reports are in, it turns out personal spending went up 0.6 percent in January after falling for the six months previous.

While consumers are spending more, they are saving more, too. The savings rate hit 5 percent in January, up from 3.9 percent in December. People are also taking out fewer personal loans.

Income headed the right direction

Unfortunately, unemployment is still climbing.The Labor Department expects that unemployment hit 7.9 percent in February. Unemployment in January  was 7.6 percent.

I mustn’t end with bad news, so on a more positive front — another tiny, but important, change. Personal income rose just a tad in January, up 0.4 percent.