Job Growth Returns to Sector After Three Years of Decline By MICHAEL SCHROEDER
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- Manufacturing in November showed the most robust activity in two decades, lifting employment in the sector higher than expected.
The Institute for Supply Management, a private research firm, said Monday that its index of manufacturing activity rose to 62.8 last month from 57 in October.
Providing solid evidence of an improving manufacturing jobs picture, the ISM employment index climbed to 51 from 47.7. The last time the employment gauge was above 50 was September 2000.
Readings of at least 50 point to strong growth in the industrial sector, which has lagged behind other sectors as the economy digs out of the recession that started in 2001.
Economists had expected the industrial index would rise to 59, according to a survey by Dow Jones Newswires and CNBC.
Calling the survey results "astonishing," Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd., said the latest reading is consistent with year-over-year growth in gross domestic product of about 7%. He added that the employment survey suggests "the three-year run of industrial job losses will soon end."
Meanwhile, construction spending increased 0.9% in October as still low mortgage rates drove residential home building to unprecedented levels. Big gains were registered in public projects as federal and state governments have ramped up spending.
Overall construction spending rose to a seasonally adjusted annual rate of $922 billion, the highest level on record, from an upwardly revised $913.5 billion in September, the Commerce Department said Monday.
Private residential construction spending rose 2.2% to a record $484.1 billion, while private nonresidential construction slipped 2.1%. The decline, the steepest since a 2.3% drop last December, was driven by weakness in construction of commercial facilities, power plants and factories.
The economic reports suggest that growth is likely to continue. "Based on this data, it appears that the recovery is gaining momentum," Norbert Ore, who directs the survey for the ISM, said in a statement. "Indications are that the manufacturing sector is ending 2003 on a very positive note, and all of the indexes support continued strength into 2004."
The ISM survey's backlog-of-orders index increased to 59 in November from 53.5 a month earlier, an indication that orders exceeded production during the month.
Write to Michael Schroeder at email@example.com
Updated December 1, 2003 12:42 p.m