The Economy Fires Up

The report on the Employment Situation will come out from the Bureau of Labor Statistics later this morning. Based on ADP’s 64,000 new-jobs figure Wednesday, and the predictions by analysts’ interviewed by Reuters that the BLS will report that an unimpressive 100,000 jobs were added in April, (though this economy has figured out a way to fool the “experts” time and again, and subsequent revisions to prior months have almost invariably been upward).

But so much of the economic news has been good this week that it almost doesn’t matter if this one comes in tepid.

Tuesday’s ISM Manufacturing report, with its reading of 54.7, blew away the “manufacturing is in a rut” meme (or in the New York Times’ case, the “manufacturing is in a recession” meme).

Thursday’s ISM report on the rest of the economy was similarly strong. Its reading came in at 56, way up from 52.4 in March, and beating the pants off Reuters’ expectation of 53 (other sources, like this one, had expectations of 54). That’s 49 straight months of expansion (meaning readings above 50) for the Non-Manufacturing data. Even CNN, whose headline was “Service Sector Soars,” couldn’t ignore the obvious.

The beat has continued in other areas this week. Again from Reuters:

Another report, from the Labor Department, showed U.S. business productivity rose at an unexpectedly strong annualized rate of 1.7 percent in the first three months of 2007 and labor costs increased far less than forecast. The data dampened concerns the tight labor market would prove inflationary.

….. A separate report showed the number of U.S. workers filing new claims for jobless benefits fell unexpectedly, by 21,000 in the latest week, to the lowest level since January.

….. Unit labor costs grew by an annualized 0.6 percent in the first three months of the year, well below the 4 percent rise analysts were expecting. It was the smallest advance in labor costs since a decline of 2.5 percent in the second quarter of 2006.

Oh, and the markets continue to blast through $3 gas, the Washington deadlock over Iraq, the spreading tyranny in Venezuela, and a number of other negatives in the news, and have headed into uncharted territory in the case of the Dow, and 6-year highs for the other indices.

If it weren’t for the self-inflicted doldrums in the housing and auto sectors, the economy would be growing at a torrid pace.