Chin Up in the Downswing

positive economic news during recession

Increase in Another Consumer Confidence Index; Manufacturing Activity up; Repair Shops Doing Well

May 01, 2009 07:00 PM
by Anne Szustek
Among May’s first upbeat business stories: the Reuters/University of Michigan Consumer Confidence Index and the Institute for Supply Management’s manufacturing index both see growth; repair shops benefit from tightened budgets.

Consumer Confidence—Again

Bloomberg reports that an improving stock market, lower interest rates on mortgages and lower gas prices are among the factors helping Americans feel more confident about making purchases, leading to the largest monthly jump in the Reuters/University of Michigan Consumer Confidence Index in approximately two years: up to 65.1 from 57.3 in March. And this is coming off already significant gains during the first quarter of 2009—the index was at a 30-year low in November, with a score of 55.3. “Consumers are noting the better financial-market conditions and that’s removing some of the panic that had ensued last fall,” Dean Maki, co-head of U.S. economic research at Barclays in New York, told Bloomberg, “Consumers are becoming less anxious, and therefore a bit more willing to spend.”

This is just the latest in positive consumer confidence index reports. Tuesday’s edition of “Chin Up in the Downswing” featured the Conference Board’s consumer sentiment index, which was up to 39.2, a five-month high on the back of the biggest monthly increase since 2005.

ISM Manufacturing Index Up for Fourth Month in a Row

In response to consumers’ rebounding demand, there’s a rise in manufacturing activity, demonstrated by the fourth month in a row of increases in the Institute for Supply Management’s manufacturing index, going up to 40.1 in April from March’s reading of 36.3. Readings of below 50 mean manufacturing activity is decreasing; however the ISM’s data indicated bumps in production and new orders from March to April. 

Repair Shops Thrive in Recession

Even though statistics show that in general, consumers are feeling more confident about making new purchases, auto, computer and appliance repair shops are still reaping the benefits from those less able to replace their durable goods. “When people used to come around, if the cost was $300 to fix it and a new one was only $500 or $600, they'd typically get a new one,” Daniel Hand of Computer Medics of Northern Virginia, told The Wall Street Journal. Today, though, “nine out of 10 times they come back and say, ‘Fix it.’” Hand’s company is pulling up some 30 percent more revenue than last year. Home appliance repair shops have reported that people are having lower-cost items like vacuum cleaners and electric razors fixed, even though the maintenance cost may be $40 less than the price of a new item.

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