In two fresh indications of a strengthening U.S. economy, a new survey showed that banks have stopped making it tougher for consumers and businesses to borrow, and manufacturing activity climbed to its highest levels in five years.
Monday's manufacturing report, from the Institute for Supply Management, cheered the stock market. The Dow Jones Industrial Average rose 118.20 points, or 1.17% to 10185.53.
Banks in the U.S. haven't entirely turned the corner: While they're not making it tougher to borrow, they're generally not making it any easier, either, according to a Federal Reserve survey released Monday.
Of more than 50 banks surveyed, none said it had tightened business-lending standards for medium or big firms, and only two said they had tightened for smaller firms. By contrast, in the October survey, eight banks tightened business lending to medium or large firms and nine banks tightened them for small firms. Lenders spent much of the past two years ratcheting back on credit amid the financial crisis.
The ISM on Monday said an index compiled from its survey of purchasing managers rose to 58.4 last month from 54.9 in December, the sixth straight month of increase. A reading above 50 indicates expansion.
With manufacturing activity at its highest point since August 2004 and continued month-to-month gains, the sector's recovery appears more sustainable than many economists predicted just a few months ago. That bodes well for the overall economy. Nomura Global Economics said it would likely revise its first-quarter gross domestic product forecast up to 3% or 3.5%, from 2.6%, following the report.
It remains to be seen whether this growth will be sustained once manufacturers have restocked inventories, a key source of the current strength.
"Things are certainly picking up in the manufacturing sector," said Norbert J. Ore, chairman of the survey committee, noting that 13 out of 18 industries experienced growth. "That's what I was looking for...a little more breadth to the recovery to indicate it was spreading."
The ISM's index for new orders expanded at a faster rate last month, while the inventory index showed businesses were reducing stocks at a slower pace. The survey also found tentative signs that manufacturers are at least beginning to think about hiring again. The employment index hit 53.3, up from 50.2 in December. But Mr. Ore said, "I think it's premature to think there would be much in the way of job growth coming out of manufacturing."
On the chart below notice how after Ovomit took office the seasonally adjusted line went from choppy to smooth & steeply up. Then for the first time in history on an unemployment spike the seasonally adjusted line went way above the actual not-seasonally adjusted line instead of holding below as it always has before. This scam was to make the headline number appear far worse than it actually was so he could blame it on Bush. Then he had VP Joe Biden go on TV & say "The economy is in much worse shape than we thought it was in" Then in March Obama has "The Working Group" buy the stock market up to 10,000 & holding. After that time the adjusted numbers go down against the unadjusted numbers to make unemployment appear to drop while it continued to climb. The discrepancy is the largest in history & is now up to 1 million.
