WASHINGTON -- A trio of reports Friday suggested the economy, while still sick, is healing a little.
Consumer sentiment, for instance, got better in April. The Reuters/University of Michigan final sentiment reading for April stood at 65.1, versus 61.9 in the preliminary survey and 57.3 in March.
Separately, the Institute for Supply Management's manufacturing index rose to 40.1 last month, from 36.3 in March. Economists expected 38.3. While readings under 50 indicate contracting activity, the report, nonetheless, showed improvement.
"Overall, the worst of the recession is hopefully over, but there is still a long way to go before activity actually starts to expand again," said Paul Ashworth, an analyst at Capital Economics.
Also Friday, the Commerce Department reported factory orders in March fell 0.9%. That was more than expected and the seventh drop in eight months. Still, the decline, following a 0.7% increase in February, was smaller than plunges at the end of 2008. Orders fell 6.5% in November, for example, and 6.0% during October.
"This rate of decline has slowed sharply in more recent months, indicating a slowing in the pace of contraction in the manufacturing sector," Insight Economics analyst Steven Wood said. "Nevertheless, the manufacturing sector is still in recession, one that is unlikely to be quickly resolved."
Non-defense capital-goods orders excluding aircraft increased a second straight month, rising in March 0.4% after surging 4.1% in February, the Commerce data said. Those bookings are seen as a yardstick for capital spending by businesses. Orders for the year were 23.1% lower.
Manufacturers' inventories in March shrank 0.8%, after falling 1.3% in February. It was the seventh drop in a row.
Businesses trying to get their output in line with weaker consumer spending sent the economy plunging in the first quarter much more than expected, a report this week said. Gross domestic product fell 6.1% January through March, capping the worst run for the economy in 51 years. First-quarter business spending dived 37.9%. Businesses pared inventories by $103.7 billion, a drawdown that siphoned 2.79 percentage points out of January-March GDP -- nearly half of the 6.1% decline.
The GDP report, while indicating the economy remained in deep recession early this year, suggested improvement was coming. The huge inventory drawdown, for instance, signaled companies were getting control of stockpiles and that a freefall in output would end. The report also said first-quarter spending increased 2.2%, after dropping 4.3% in the fourth quarter and 3.8% in the third quarter.
The ISM new orders index increased to 47.2 from 41.2 in March. Production rose to 40.4 from 36.4. Employment remained extremely weak, but with some improvement. The index stood at 34.4 in April from 28.1 in March. The inventory index stood at 33.6, from 32.2 in March.
"This ISM report gives a sign that the worst of the decline may be over and that the inventory swing will moderate the pace of future reduction in manufacturing output," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI trade group. "While it is too early to believe that the recession has bottomed out, we are hopeful that a trough can be reached by the end of summer."
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