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The Economy Dug Out From Winter Snow and Sluggishness in March

NEW YORK (TheStreet) -- Does today's economic news mean it's time to cool some of the enthusiasm for Friday's jobs report?

The market didn't seem to think so, with the major averages all rising. Better-than-expected auto sales certainly seem to be helping: sales at Fiat Chrysler (FIATY) rose 13.5% in March to set the pace, with the larger Ford (F) up 1.4% and Toyota (TM) down 2%. But the weaker-than-forecast print on the Institute of Supply Management manufacturing report for March, as well as soft construction data for February released Tuesday morning, provide one note of caution.

The ISM index rose to 53.7, up 0.5 points on the ISM's scale. Anything over 50 points toward an expansion, but the number missed an average forecast of 54. The number represents only a limited bounce-back from the weather-related problems in January and February, IHS Global Insight economist Michael Montgomery said.

"The important employment score moderated to 51.1 for its mildest reading since last June, but still positive and consistent with moderate growth over time,'' Montgomery said. "If the sector was being given grades it would have garnered a B+ in late 2013, faltered to D on weather in January and February, but managed a C or C+ in March.''

But that seems to have been trumped by satisfying news about vehicle sales for March. And that's logical enough  for several reasons -- real sales data overrule a survey like ISM, and better news at the point of sale will work its way back into new orders that will show up in ISM reports to come, economist Joel Naroff said.

The same is true of the 0.1% drop in construction spending, which was led by a 0.7% drop in residential spending. The hit to residential building in February is likely about the weather, and should wash out in the spring as the economy improves, Naroff said.

The one thing that is still worrisome is that government construction is still declining, compared with a year ago, as austerity at the state and local level proves hard to shake.

Overall, the data seem to suggest just the spring rebound that the market has been looking for. The comments in ISM's report, a catalog of anonymous quotes from purchasing executives who are on the institute's survey panel, are uniformly positive, virtually all of them mentioning high expectations for the year or improving demand.

On Wednesday, ADP's (ADP) monthly report on private-sector hiring will begin to show whether the optimism has begun to translate into hiring. And on Friday, the Labor Department's unemployment report will explain whether it's turning into new jobs, a better mix of part-time and full-time work, and most importantly, better wages.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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