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After bumpy August, economy shows signs of growth

WASHINGTON — August began with rising fears that another recession was about to hit. That was then.

A month later, the economy appears more resilient, suggesting that consumers, businesses and investors remain confident enough to keep spending.

A more authoritative test will come today, when the government issues the August jobs report. Employers are expected to have added 93,000 jobs, which would not be enough to significantly lower the jobless rate of 9.1 percent.

A stream of data released Thursday showed more signs of strength than would have been expected a few weeks ago:

• Americans kept shopping in August despite a month of bad news. Faced with higher prices for food and clothes, and with Hurricane Irene hitting in the middle of the back-to-school shopping season, revenue in August among 26 retailers was up 4.6 percent at stores open at least a year — a key industry measure — according to the International Council of Shopping Centers.

• The Labor Department reported that productivity declined at an annual rate of 0.7 percent in the April-June period. That was a downward revision from the 0.3 percent decline first estimated a month ago and the second straight quarterly decline. Labor costs rose at an annual rate of 3.3 percent, faster than the 2.4 percent increase originally reported.

• U.S. builders cut back on spending by the largest amount in six months in July, with sharp reductions in outlays for government building projects. Construction spending fell 1.3 percent to a seasonally adjusted annual rate of $789.5 billion, the Commerce Department reported Thursday. That is 3.5 percent above an 11-year low hit in March, but it is still only about half the $1.5 trillion that economists view as a healthy level for construction. Economists believe it could take four years before construction activity returns to more normal levels.

• Manufacturing grew a little slower in August than the previous month but didn't contract as some had feared. The 25th straight month of growth was a hopeful sign that U.S. factories weathered a difficult summer for the economy. The Institute for Supply Management said Thursday that its manufacturing index slipped to 50.6 last month, down slightly from a reading of 50.9.

• Fewer people applied for unemployment benefits last week, a sign that the job market may be improving slightly. Weekly applications fell 12,000 to a seasonally adjusted 409,000 last week, the Labor Department said Thursday. It was the first decline in three weeks.

"Today's releases add to the evidence that underlying economic conditions aren't half as bad as feared a few weeks ago," said Paul Ashworth, an economist at Capital Economics.

After bumpy August, economy shows signs of growth 09/01/11 [Last modified: Thursday, September 1, 2011 10:58pm]
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