Manufacturing rebound continues! Residential construction hits record high in April! Commercial building rises for the first time since January! Home prices jumped 6 percent in the first quarter, from a year earlier.

Why all the exclamation points? Because if you're just watching the stock market, you might think the economy was still looking pretty dismal. Let's make it clear: The economy is in recovery. That's the message from Monday's reports, and more good news probably lies ahead.

Today we again see that one of the four indicators used to date the business cycle -- the turn from growth to recession, back to growth again -- is flashing a major green light, and that's the manufacturing sector. The National Bureau of Economic Research has four indicators -- employment, industrial production, personal income and business sales. Manufacturing makes up about 87 percent of industrial output.

The Institute of Supply Management's monthly survey of manufacturers is one of the most important numbers we get each month. With May's rise, the group's index has shown growth in manufacturing for four months in a row, bringing it to its highest level since February 2000. And new orders are up even more than the overall business activity index, so all this points to more gains ahead for manufacturing and the overall economy.

Also very positive: Inventories are too low according to 22 percent of those surveyed, and economists say that means a lot of companies will have to start rebuilding them, and that means more orders, output, and maybe even more jobs. According to John Ryding of Bear Stearns, most of the strength in the latest report continues to come from sectors related to the consumer like autos and housing.

Technology is still putting in a mixed performance. There's still little sign that capital spending is picking up and he says -- like virtually every other economist on Wall Street -- that's what MUST pick up for the economy to really start firing on all cylinders. But Ryding is convinced that pickup is just around the corner.

Worth noting the rise in the Prices Paid component of the ISM survey to 63 in May from 60 in April. Remember: Any number above 50 means growth, so this signals more companies receiving higher prices for their output. Once upon a time, we would have worried about inflation and the Federal Reserve raising interest rates, but not now. Even Fed Chairman Alan Greenspan thinks companies need to raise their profits if the economy is to grow again. And getting some pricing power back for manufacturers is one way of doing that.

Greenspan has also noted that inflation is low and expectations for rising inflation low, which gives the Fed time before it raises rates. Interpretation by many Wall Street economists: The Fed is willing to tolerate a little more inflation to make sure the recovery takes hold.

Why this shift from a couple of years ago? As Greenspan has noted, whatever rise in inflation develops is coming off a very low base, AND worker productivity appears to be strong enough to keep unit labor costs low. Maybe even more important is a perception that if the economy were to falter from here, de-flation could be just around the corner. When more prices are rising than falling, profits tend to get crushed, and company layoffs really go through the roof. Not a pretty picture. Not a likely scenario in the United States, according to most economists, but a reality in Japan. That makes it more than a theoretical abstraction for the Fed.

Speaking of prices going up, the official numbers on single family homes are in from the Office of Federal Housing Enterprise Oversight, an independent entity of HUD which watches over the nation's mortgage lending giants, Fannie Mae and Freddie Mac. Prices rose 6.05 percent in the first quarter of this year, but that is actually a less rapid pace than last year. Take a look. Prices rose 7.4 percent in the fourth quarter, 8.9 percent in the third quarter, 9.0 percent in the second quarter and 9.3 percent in the first quarter -- all on a year-over-year basis.

It's more good news for homeowners because it increases their wealth. And that's good for the economy if it helps keep spending going at a time when stocks are going nowhere in the aggregate.

When we get to the end of the week, you might not feel the news is so good because the May employment report is expected to show only another small gain in new jobs and a small rise in the unemployment rate. But as long as that helps keep the Fed on the sidelines, with fingers crossed and hoping for a sustained recovery, then maybe that's the kind of not-so-good news that isn't so bad.

Kathleen Hays co-anchors Money & Markets, airing Monday to Friday on CNNfn, and appears throughout the day reporting on the economy and how it affects financial markets. As part of CNN's Business News team, she is also a regular contributor to Lou Dobbs Moneyline.