Have We Hit Bottom?

The Lehmann Letter ©

The March employment numbers were terrible: 663,000 jobs lost and the unemployment rate up to 8.5%. In addition, the workweek and overtime continue to contract. We will be very fortunate if the unemployment rate remains below 10%.

But other economic indicators tantalized us this week. For instance:

The Purchasing Managers’ Index rose to 36.3 in March from 35.8 in February, and both those numbers were better than December’s 32.9. Yet we should keep in mind that any number below 50 signals contraction. So the slight improvement indicates that manufacturing is shrinking at a steady pace rather than an accelerating pace.

New-vehicle sales improved to 9.8 million in March from 9.1 million in February. Keep in mind, however, that both those numbers are lower than anything we’ve seen for the last 25 years.

Earlier editions of the Lehmann Letter reported that housing starts and homes sales as well as new orders for nondefense capital goods had shown slight improvement, although they too were well below their earlier highs.

Does all this mean we’ve hit bottom? Maybe. But even if we have, there’s a long way to go before we are out of the ditch.

© 2009 Michael B. Lehmann