Thursday, April 01, 2010

U.S. Manufacturing Strong-Construction Weak

Stock- and commodity prices rallied all over the world today as manufacturing surveys just about everywhere surprised on the upside.

The U.S. number in particular was strong, coming in at 59.6, the highest since July 2004. But on the other hand, construction spending in America was weaker than expected and continued to decline rapidly. Construction spending was 6% lower than 3 months earlier, implying an annulized rate of contraction of 22%. There is little doubt that the U.S. economy overall is growing, it is not growing strongly and growth is unusually uneven with a strong manufacturing sector and a continuing deep construction recession.

To some extent, the weather factor was probably involved in both depressing the February construction number and boosting the March manufacturing number, but there is little doubt that the underlying strength of the manufacturing sector is nevertheless greater than the strenth of the construction sector.