Midwest Business Shrinks for 2nd Month
Business activity in the U.S. Midwest contracted in March for the second consecutive month, a report showed Monday that continued the recent run of data highlighting worries of recession.
The National Association of Purchasing Management-Chicago business barometer rose to 48.2 from 44.5 in February. That was below the level of 50 that separates contraction from expansion but better than the result of 46.0 foreseen in a Reuters poll.
February's result was the weakest in six years.
The report showed marked improvement on the jobs front but also the persistence of entrenched inflation amid recessionary conditions, which the report termed "recflation".
"Apparent improvement from a less negative value was tempered by the dual facts that the barometer remained below neutral and did so for the second consecutive month," the
report said, adding:
"The presence of recflation -- recession and inflation -- provides consumers, business professionals, policymakers, and politicians with a host of challenges and no simple answers."
Wall Street initially took an optimistic view of the report, pushing briefly higher on the
better-than-expected result, before stocks lost their gains.
The dollar, however, was down against the euro.
Government bonds, which generally benefit from signs of a weakening economy, pared earlier gains after the data.
The good news for economic bulls came in the form of a sharp rise in the employment index to 44.6 in March from 33.5 in February. That was the biggest one-month employment gain
since February 2002.
Also, the new orders index jumped to 53.9 in March from 48.8 in February.
On the inflation front, however, the news was bad. The measure of prices paid jumped to 83.9 in March -- its highest since June 2006 -- from 79.4 in February.