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Thursday, 23 May, 2002, 20:37 GMT 21:37 UK
US manufacturing hopes raised
US factory
Factory output has risen every month since New Year
Hopes of a sustained recovery in the US economy have been raised by new government figures showing a rise in demand for manufactured goods.

The data showed that demand for cars, communications equipment, machinery and other costly manufacturing goods rose sharply in April.

The 1.1% rise in orders for durable goods was the fifth monthly rise in a row.

And it was much larger than analysts' predictions of 0.1%.

This was good news for the US manufacturing sector where hundreds of thousands of jobs have been lost during the recession, analysts said.

"Importantly, the gains were broad based, as almost every sector reported demand had increased," said Naroff Economic Advisors chief economist, Joel Naroff.

"The recovery might not be strong, but it's here to stay," said Deutsche Bank Securities senior US economist, Carey Leahey.

The data helped US shares edge higher by the close, with the Dow Jones industrial average closing up 0.53%, and the tech-heavy Nasdaq gaining 1.45%.

Optimism returns

One of the problems in the US recently has been that companies, wary about the future, have been cautious about investing.

"It looks like there is a turnaround starting to develop in business investment," said Barclays Capital chief US economist Henry Willmore.

Some economists said the figures made it more likely that the US Federal Reserve would be raising interest rates soon, but others disagreed.

"It looks like the manufacturing side of the economy is improving, but I think the Fed is still going to want to see some improvement in the employment situation before they act," said AG Edwards & Sons chief economist, Gary Thayer.

There was some relief to be had from new figures showing that the number of unemployment insurance claimants fell by 9,000 last week to 416,000.

That was the lowest level in eight weeks.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

23 May 02 | Business
30 Apr 02 | Business
22 May 02 | Business
26 Apr 02 | Business
24 Apr 02 | Business
18 Apr 02 | Business
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