This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

'Normal' Manufacturing Data Set Up a Strong Jobs Report Friday

NEW YORK (TheStreet) -- Glitches aside, this week's manufacturing data look pretty normal, reinforcing the picture of steady, if not spectacular, cyclical growth that will push private employment up when closely watched jobs reports hit later this week.

The Census Bureau reported Tuesday that April factory orders rose 0.7%,  topping forecasts of 0.5% growth and hitting the highest level since the factory orders index was first calculated in its current form in 1992. The March increase was also revised upward, to 1.5%.

The orders report comes a day after the Institute of Supply Managers' purchasing managers survey reported its measures of sentiment, new orders and hiring plans pointed to slightly stronger growth than in April, continuing a recovery from this winter's weakness. At least, it did once ISM fixed its software error that mistakenly caused the institute to report a slowdown in manufacturing growth.

The details of the report point to more growth ahead. In particular, Tuesday's report -- showing unfilled orders for capital goods are up 1.1% -- suggest manufacturers will continue to need more workers. That buttresses the expectations that Friday's jobs report will include at least the 213,000 new jobs projected in a survey of economists by Econoday. A preview will come when payroll processor ADP reports private-sector hiring on Wednesday.

Some details of the shape of the new and unfilled orders are especially encouraging. Unfilled orders for computers rose 4.7%, while those construction materials rose 1.1%. Consumers generally are in a buying mood, with new orders for non-durable consumer goods rising 1.0%, more than enough to offset a decline in the much smaller category of consumer durables like refrigerators. Overall, consumer orders rose 0.7%.

But there are plenty of caveats, especially when it comes to business investment, whose sluggishness has emerged as the biggest reason why the recovery hasn't accelerated. New orders excluding the aircraft (where big orders are intermittent enough to distort results) and defense spending actually dropped 1.2%. Monday's ISM survey painted an oddly pessimistic picture on hiring plans at manufacturers, given recent gains, especially since indices of new orders are pointing to somewhat faster growth.

The bottom line: We have a consumer-led recovery, in which increasingly bold consumers are showing business the demand is finally there to support more investment. This is true notwithstanding the sluggish growth in wages that Federal Reserve Chair Janet Yellen has repeatedly cited as a sign of the economy's lingering weakness.

The biggest test of whether the recovery will truly accelerate in the second half is whether Corporate America finally takes that hint and stops sitting on its collective wallet.

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

>>Read more: May Auto Sales Soar - Just Don't Expect the Same in June

Tim Mullaney writes on the economy, health care and technology. Follow him on Twitter @timmullaney or contact him at timothy.mullaney@thestreet.com

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,014.80 -24.69 -0.14%
S&P 500 1,988.63 -3.74 -0.19%
NASDAQ 4,537.2540 +5.15 0.11%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs