Both the S&P 500 and Dow Jones Industrial Average – two of the most closely watched stock market indexes – gained ground early this week after newly released data on manufacturing development exceeded economists’ expectations, which buoyed investor confidence.
The Institute for Supply Management raised its factory index to 51.5 in its report on economic activity in September – up from 49.6 in August. Economists surveyed by Bloomberg had anticipated a much smaller gain, projecting a September reading of 49.7.
James Paulsen, chief investment strategist at Wells Capital Management, told Bloomberg Businessweek “the fact that manufacturing is beginning to recover will significantly reduce fears of a potential U.S. recession.”
Paulsen also cited an apparent easing of concerns regarding the financial situation in Europe, referring to the increase in manufacturing activity as an indication that global demand was starting to strengthen and solidify.
The jump in factory output is timely, as the U.S. government and private sector partners have teamed up to launch a “Manufacturing Day” initiative, set for October 5. Members of the public are being invited to tour local manufacturing sites and learn about both the history of the industry and the present situation.
This increase in optimism may have some business owners thinking about how to position themselves to capitalize on economic growth. For companies that are on the fence about expansion, particularly with regard to hiring plans, having the right data about market conditions is critical. But, so is the ability to interpret pertinent information and predict what the mid- and long-term trends will be.
Working with the interim experts at a financial project consulting service can help business leaders make sense of market activity and economic news, allowing them to make better decisions at critical moments.