A better than expected report from the Institute for Supply Management (ISM) suggests that the longest recession since World War II may be easing.
The ISM said its index showed the slowest pace of decline in July measuring 48.9 reading vs. 44.8 in June. It was the slowest decline since last August.
According to the ISM, production and new orders jumped to their highest level in two years, while new export orders grew after shrinking for nine months.
“If we stay on trend … we would expect to be above 50 next month,” said Norbert Ore, chair of ISM’s manufacturing survey committee. A reading above 50 would indicate growth in manufacturing, something that hasn’t happened in 18 months.
That suggests that there may be light at the end of the tunnel after all—although no one is very optimistic about what it will look like on the other side.
As for the recession itself, economist Nouriel Roubini now believes it may drag on for another two quarters.
From Bloomberg by Rebecca Keenan entitled: Recession Won’t End Until Year-End, Roubini Says
“The global economy is still in a recession that won’t end until the end of the year, said Nouriel Roubini, the New York University economist who predicted the global financial crisis.
“There is now potentially light at the end of the tunnel,” Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. Roubini was dubbed Dr. Doom for predicting the crisis. “I don’t think this recession will be over until the end of the year.”
Roubini, chairman of Roubini Global Economics and a professor at NYU’s Stern School of Business, predicted on July 23 that the global economy will begin recovering near the end of 2009 before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.
The U.S. economy is likely to grow about 1 percent in the next two years, less than the 3 percent “trend,” Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
The global economy will contract 1.4 percent this year, deeper than forecast in April, and a sustained recovery from the worst recession since World War II may be a year away, the International Monetary Fund said July 8.”
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