Positive figures fail to impress

THE positive manufacturing figures out of Philadelphia yesterday failed to impress the markets.

It showed output at 55.6, well above the neutral 50 point. Any figure above 50 indicates growth and below 50 is a sign of decline. While the figure matched expectations, it failed to impact on the fragile investment psyche in the US, and the Dow rose by just 0.25%.

The bank also revised the previous month’s figure up significantly, which meant the last two months’ manufacturing output figures were on a par with each other in terms of positive signs of growth in production.

The big downer accompanying the figures, however, was the failure of the two good production months to boost business confidence among manufacturers gong forward. On a six-month outlook basis, business confidence fell sharply from 52.2 to 32.6 as manufacturers looked to grimmer times ahead.

They see consumer confidence stalling with people beginning to question the Bush economic strategy. His latest initiative to boost growth is seen as a boon for the rich and not ordinary Americans. Ulster Bank Markets’ chief economist Niall Dunne says the reaction understandable.

Jobs are not being created and the view is that the continuing output rise is down to firms getting more out of less workers. Figures from the US are “choppy,” said Mr Dunne and the dip of 104,000 jobs in retail in December, the busiest period of the year, did not inspire confidence, he said.

The US economy will do reasonably well this year, but talk of growth above 3% has to be dispelled.