Overall hiring has accelerated this year. Employers have added an average of 202,000 jobs a month from January through June. That's up from 180,000 in the previous six months.
Better hiring has started to boost inflation-adjusted incomes after several years of stagnant wages. Joe Carson, chief U.S. economist at AllianceBernstein, a mutual fund company, calculates that average hourly pay rose at a 3.1 percent annual rate in the second quarter, the fastest pace since the fourth quarter of 2008. That was comfortably ahead of inflation, at just 1 percent.
And business spending has started to increase. Companies have ordered more industrial machinery and other equipment for four months in a row. As those orders are filled, factory production should increase.
Manufacturing is also benefiting from strong auto sales. They topped 7.8 million in the first six months of 2013, the best first-half total since 2007. Analysts expect sales will stay strong for the rest of the year.Carson notes that housing and autos were the primary sources of growth in the second quarter. Both have benefited from the Federal Reserve's low interest-rate policies. Those sectors usually rebound early in recoveries. But after the Great Recession ended in June 2009, they were held back by tight credit and cash-strapped consumers. "It's almost like a traditional recovery is just starting, even though we're in the fifth year," Carson said. Federal Reserve officials have forecast better growth in the second half of the year. And Fed Chairman Ben Bernanke has said that the central bank could begin to scale back its bond purchases later this year if the economy strengthens. But Fed officials typically put greater weight on employment and inflation data than the GDP figures. The Fed concludes a two-day policy meeting on Wednesday, at which point it could clarify its interest-rate policies.