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U.S. manufacturing picks up
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December 3, 2001: 11:32 a.m. ET
Factories log rush of new orders, but sector still in recession after Sept. 11.
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NEW YORK (CNN/Money) - The pace of manufacturing picked up in November as factories logged a rush of new orders in the weeks after the Sept. 11 attacks, the nation's purchasing managers said Monday, yet the improvement was far from bringing the sector out of a recession.
The National Association of Purchasing Management said its index of manufacturing rose to 44.5 in November from 39.8 in October. The number came in above the 41.8 analysts had forecast, according to Briefing.com. But it remained below 50, and a reading below that level points to contraction in the manufacturing sector.
Manufacturing has been in a slump for well over a year.
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CNNfn's Lisa Leiter reports on the manufacturing numbers.
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The NAPM new orders index increased 10.5 percent from the previous month to 48.8, but manufacturing employment continued to decline along with inventories.
Additionally, the NAPM's index of order backlogs declined for the 19th consecutive month.
"After absorbing last month's aftershock of the terrorist attacks, the manufacturing sector showed surprising resilience in November," said Norbert Ore, chair of the NAPM's business survey committee. "The trend is definitely in the right direction, but it is too soon to claim an imminent recovery."
Separately Monday, the government reported a 1.9 percent increase in construction spending in October, reversing five consecutive months of declines, indicating the possibility that construction is rebounding from a slump as the economy bottoms.
"You can't read too much into any one number, but it's a sharp rebound from the lows of October," said Wayne Ayers, chief economist at FleetBoston Financial. "Given that and a few other things, the bond market's more recent expectation is that the Fed, if it's not finished, is close to being finished."
The Federal Reserve has lowered interest rates 10 times this year in an unsuccessful attempt to keep the economy from slipping into recession. Some believe that Monday's encouraging numbers are not enough to keep the Fed from lowering rates an 11th time when it meets again on Dec. 11.
Despite the improvement in new orders, the NAPM's index of order backlogs declined for the 19th consecutive month.
"We're still in contractionary mode, but it's highly encouraging because we do know that the manufacturing sector is one of the first to go into a recession and chances are it will be one of the first to exit that recession," said Anthony Chan, chief economist at Banc One Investment Advisors.
Ore said manufacturing is set for continued declines in November, despite signs of encouragement, and a full recovery will take time to materialize.
Both reports followed the Commerce Department's disclosure of a 2.9 percent increase in personal spending in October, compared with a revised decline of 1.7 percent in September. Americans took advantage of big bargains on autos and other goods, helping push the gain above analysts' expectations for a 1.9 percent increase, according to Briefing.com.
Additionally, personal income was virtually unchanged in October, slipping less than 0.1 percent. Analysts anticipated a 0.1 percent increase, according to Briefing.com. 
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