WASHINGTON — Hopes for the fledgling economic recovery got a boost Monday from better-than-expected news on manufacturing, construction and contracts to buy homes.
The surprisingly strong readings provided some comfort that the economy is packing more momentum than assumed going into the end of the year.
Still, with jobs scarce, lending tight and consumers wary of spending, it’s unclear whether the gains can be sustained as government stimulus programs wind down.
The Institute for Supply Management’s gauge of manufacturing activity grew in October at the fastest pace in more than three years.
It was driven by businesses’ replenishing of stockpiles, higher demand for American exports and support from the government’s $787 billion stimulus program.
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“It clearly looks like we are seeing a turnaround in the manufacturing sector,” said David Wyss, chief economist at Standard & Poor’s in New York.
Economists cautioned that the manufacturing pattern seen in the past two post-recession recoveries likely will be repeated this time: In each case, early strength in manufacturing, led by companies’ restocking of inventories, faded within a few months.
At the White House, President Barack Obama said the public and private sectors must find more ways to create jobs to continue the recovery. In remarks at the start of a meeting with his economic advisers, Obama credited his stimulus package for recent better economic figures, including the manufacturing boost. The president said there was still “a long way to go,” especially in creating jobs.
The ISM, a trade group of purchasing executives, said its index showed manufacturing employment grew for the first time in 15 months, rising to 53.1 last month from 46.2. But the measure tracking new orders, a signal of future production, slipped in September.
Moreover, layoffs continue. Sun Microsystems Inc. said in October it plans to eliminate up to 3,000 jobs before it’s acquired by Oracle Corp.
“There’s still a lot of caution from our clients,” said Richard Zambacca, president of Think Resources, an engineer staffing company in Atlanta. “People are looking for funding.”
AP Business Writer Tali Arbel in New York and AP Real Estate Writer Alan Zibel in Washington contributed to this report.
