Shiny happy news flash: In early trading, the Dow Jones industrial average was up 145 points, hitting its high for the year!
OK, today is only the first trading day of 2010, and the Dow is still a bit below its 52-week high, reached just last Dec. 29. But there's a surprising amount of optimism in the economic news reports this morning, and given the freshness of the year, HTWW is choosing to interpret these omens favorably.
Hottest off the press: The Institute for Supply Management's U.S. manufacturing activity report, released at 10 a.m. EST. The ISM's "purchasing managers index" (PMI) rose to 55.9 percent, its best performance since April 2006. A reading above 50 percent indicates that the manufacturing economy is growing. Today's numbers, reports the Wall Street Journal, were better than economists expected.
A Bloomberg survey of economists predicts that the next monthly U.S. labor report, to be delivered this Friday, will show "that payrolls fell in December by the smallest amount since the recession began two years ago." Rounding out the Monday Pollyannish jubilee, the Wall Street Journal also notes that Tuesday's sales reports for automakers are likely to show that vehicles moved off of dealer lots at a relatively brisk pace in December.
Now for the obligatory caveats. Construction spending, hammered by oversupply in the residential housing market and the ongoing crumpling of the commercial real estate sector, fell in December. Even a "small" contraction in the labor market is still a contraction. The increase in manufacturing activity may only be a reflection of companies rushing to restock inventories after slashing to the bone during the height of the financial panic. December car sales were boosted by big incentives from GM to get lame-duck Saturns and Pontiacs out of dealerships. And, of course, where the stock market is an hour after the opening bell doesn't tell us where it will be at the close of the day, nor does investor bullishness track all that well to the realities of ordinary American life.
Still, the contrast with where we were a year ago today is striking. Maybe we can build on this?