Consumer Sentiment, Midwest Manufacturing Indices Make Big Gains

Reports on consumer sentiment and manufacturing in the Chicago area made significant gains during November, suggesting the recovery may be getting back on track.

The University of Michigan released its final report on consumer sentiment, which showed a gain in the index to 84.2 during the 11th month of the year, down slightly from the preliminary estimation of 85, but still significantly higher than October's figure of 80.6.

The news was coupled with a report from the Institute of Supply Management-Chicago that showed the first expansion of factory activity in the heavily industrial Chicago area. The ISM-Chicago's factory index rose to 54.3 in November from a 45.9 reading in October.

The ISM index operates on a base of 50, with numbers above 50 signaling expansion. The expansion of manufacturing followed two straight months of contraction.

The index is often a good indicator of nationwide manufacturing activity. A report by the ISM on manufacturing nationwide is expected out on Dec. 2.

The two reports led some economists to tell Bloomberg that the economy has "bottomed" and that the country could be building a solid base for a recovery early in 2003.