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Economy takes on a rosier glow

Manufacturing expansion leads to optimism about job growth
Milwaukee Journal Sentinel December 1, 2010
John Schmid Text

World stock markets rallied Wednesday amid signs that Changing times
the American recovery could be gaining traction - led
partly by factory output - and relief that Europe might be But sentiment appears to be shifting, economists said,
on the verge of finding some much-needed leadership on not least after the government last week revised its
its widening financial crisis. estimate of the pace of economic growth to 2.5% in the
third quarter from a preliminary 2.0%.
“There is a subtle mood shift,” said Bob Atwell, chief
executive at Nicolet National Bank in Green Bay. Even as In a busy day of economic releases Wednesday, the
mortgage and banking businesses remain a drag on the Federal Reserve Bank reported that 10 of its 12 regions
U.S. economy, “I sense a shift in psychology that’s more around the nation are growing. Only those with
tilted to optimism than pessimism.” headquarters in Philadelphia and St. Louis reported that
conditions are mixed.
The Institute for Supply Management, a national industry
association, said its widely followed manufacturing The Institute for Supply Management’s manufacturing
activity index posted its 16th straight month of expansion index should carry special weight in Wisconsin, which
in November. employs a greater share of its workforce in manufacturing
than any other state. The factory activity index came in at
Another indicator that curled upward Wednesday was 56.6 for November, little changed from 56.9 in October.
the monthly employment survey from ADP Employer Any reading above 50 indicates growth. At the depths of
Services, which showed that U.S. employers added more the recession, it was closer to 30; as recently as April, it
jobs than in any other month since November 2007. shot to 60.4.
Data from ADP, which provides payroll and tax services
to other companies, sparked a speculative frenzy ahead Awaiting news on jobs
of Friday’s official monthly employment report from the
U.S. Labor Department, as some traders bet the nation Wall Street’s rally set the stage for Friday morning’s
finally will show a large monthly job gain. release of the Labor Department’s jobs report for
The Dow Jones industrial average posted its biggest gain
since Sept. 1, rising 249.76 points, or 2.3%, to 11,255.78. Job-creation gains have been glacial at best during
The Standard & Poor’s 500 index rose 25.52, or 2.2%, to most months so far this year. In October, the ranks of
1206.07. The Nasdaq composite rose 51.20, or 2.1%, to unemployed Americans who gave up even trying to look
2549.43. for a job hit a record of more than 1.2 million, even as the
nation managed to add 151,000 net new jobs.
As recently as summer, economists speculated about the
likelihood of a double-dip recession. A full 12 months Economists on average expect the nation’s employers
into the recovery, American unemployment remains to at least match October’s gains, said Rogier Kamerling,
high by any measure. And in many ways, the economy chief economist in Milwaukee at M&I Capital Markets.
continues to send mixed signals.

Page 1 of 2 Economy takes on a rosier glow | Milwaukee Journal Sentinel December 1, 2010

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But some of the most crucial events for stock investors “We are generally optimistic that recovery will continue
took place in Europe. in fiscal 2011,” chief executive Keith Nosbusch said last
The instability that rocked Greece earlier this year was
followed by the second European financial bailout in less
than a year in Ireland. One reason that markets fell in the
three previous trading days were fresh concerns that the
fiscal contagion from Greece and Ireland could spread
to Spain, Portugal and Italy, which all share the same
currency under Europe’s 11-year-old euro project.

“Ireland you can deal with, but Spain and Italy are big,”
Kamerling said.

Some of the run-up on Wednesday was fueled by

hopes that the European Central Bank, which manages
the single currency, will use its monthly meeting on
Thursday to signal new activism to support the euro bloc
economy, Kamerling and others said.

Some now expect the Frankfurt-based European

Central Bank to show a willingness to buy bonds issued
by euro zone countries, a move that pumps liquidity
into the European financial system. The Euro Stoxx 50,
which tracks blue chip companies in Europe, rose 2%

In Asia, meanwhile, stocks rose on signals that the

Chinese economy is growing. A Chinese state index
of manufacturing activity indicated that the country’s
economy expanded for the 21st straight month.

Rockwell sees strength

Gains in the manufacturing sector in the United States

and China have not been lost on Rockwell Automation
Inc., which many view as a bellwether of the global
manufacturing economy because it outfits factories with
systems to enhance their productivity.

The Milwaukee-based company has been telling

investors for weeks that it sees strength in the industrial
sectors. Asked Wednesday for comment, Rockwell
repeated its statement that manufacturers are beginning
to make large capital investments in their plants.

Page 2 of 2 Economy takes on a rosier glow | Milwaukee Journal Sentinel December 1, 2010

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