December 2, 2010 in Business

Growth reports buoy stocks

Private-sector hires hit three-year high
Christopher S. Rugaber Associated Press
 

WASHINGTON – The economy is showing new life in the final months of the year.

Factories are busier, construction spending is up, and auto sales are rising. And on Wednesday the stock market had its best day since September after a report that the private sector hired the most workers in three years.

“The economy is starting to show better overall momentum,” said Brian Bethune, an economist at IHS Global Insight. “There’s a steady improvement in the overall tone.”

A private trade group said U.S. factory output grew for the 16th straight month in November as auto sales rebounded and businesses invested more in industrial machinery.

The Institute for Supply Management said its index of manufacturing activity came in at 56.6 for November. Any reading above 50 indicates growth. The October figure was 56.9. At the depths of the recession, it was closer to 30.

And a new survey by the Federal Reserve finds that almost all of the nation – 10 of its 12 regions – is growing economically. Only two regions, those around Philadelphia and St. Louis, report that business conditions are mixed.

Automakers are behind much of the growth in manufacturing. Ford, General Motors and Chrysler all reported double-digit sales increases for November. The news is particularly welcome for GM, which just returned as a public company.

The positive economic news comes on top of other signs that Americans are increasingly willing to spend money, raising hopes for the holiday shopping season. Measures of spending, consumer confidence and personal incomes are all up.

The Dow Jones industrial average rose more than 249 points. It closed at 11,255, its best finish since Sept. 1 and about 200 points shy of its highest close since the financial meltdown in fall 2008.

Investors were mostly responding to strong manufacturing data out of China and a report showing that small U.S. companies hired the most workers in three years. ADP Employer Services said employment at private companies jumped by 93,000 in November, the largest increase since November 2007 – right before the recession began.

Small businesses, which have struggled to get credit since the recession, had the biggest gains.

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