Today a day full of optimism as the manufacturing sector contracted yet at a lower pace while beating market expectations while the University of Michigan released its consumer confidence survey showing that it spiked also higher than analysts predictions.
The Institute for Supply Management index (ISM) manufacturing for the month of April was released at 40.1 which is higher than the prior and forecasted readings of 36.3 and 38.4, this reading marked the highest since September.
Although the sector is contracting since the reading remains below 50 yet the pace of the shrinkage is easing while higher than 50 indicates an expansion. As the sectors are improving in the United States, it is further supporting that the pace of the global recession is slowing down.
Taking the ISM data into details we see that the prices paid index rose to 32.0% from 31.0% while it was predicted to come in at 34.0%, we are still seeing that prices are pressured in the economy from the crippled domestic demand. Production rose to 40.4% from 36.4% which is a good indicator that production is somewhat picking up therefore hinting that demand is slightly picking up.
New orders jumped to 47.2% from 41.2% while we witness that the employment index rose to 34.4% from 38.1% showing us that the manufacturing sector is not shedding employees. Also looking at imports it spiked to 42.0% from 33.0 percent.
Also in news was factory orders for March declining to -0.9% from the revised prior reading of 0.7% from 1.8% which is worse than the projected -0.6 percent.
The University of Michigan released its consumer confidence survey for the month of April showing that it leaped to 65.1 higher than the preceding and anticipated readings of 61.9 respectively. This reading also marked the highest since September as Americans have faith that the anticipations in the market regarding the recession finding is bottom is true and that a recovery will happen by the end of this year.
When confidence rises in the U.S. economy therefore will support consumption which represents two-thirds of the gross domestic product (GDP) since an increased sentiment in the nation, leads to higher spending in the economy which will support economic growth to rise from its slump.
Although there is optimism in the markets that the worst has come, but we can forget that there is still considerable strain in the financial markets while still the lending system is rigid. As long as these factors are visible to us, then we can not say that a recovery will happen because without tranquility in the banking sector, a recovery will be hard especially as lending is restricted to businesses and consumers which are the ones responsible behind fueling economic growth.
Dear reader the weekend is here so we are going to say enjoy the weekend and let us hope that next week's economic data will be brighter than this week.
The U.S. stocks extended its declines as a result of profits from MasterCard Inc. coming in worse than projected. As of 14:54 GMT the DJIA fell 28.27 points or 0.35% to 8,139.85 points, the NASDAQ declined 7.65 points or 0.45% to 1,709.65 points while the S&P 500 shed 3.22 points or 0.37% to 869.59 points.