Factories are producing more. Construction is growing. People are buying more cars. The holiday shopping season is off to a strong start.
Normally, all that would suggest a bright outlook for the economy. Problem is, employers still aren’t hiring much, the number of people seeking unemployment benefits remains high and Europe’s debt crisis poses a grave threat to the future.
Thursday’s mixed economic picture came a day before the government will report on unemployment and job growth for November. That report is expected to show a modest net gain of 125,000 jobs, scarcely enough to keep up with population growth. The unemployment rate is projected to remain 9 percent.
Analysts say the economy remains locked in a good-but-hardly-good-enough position: It’s growing consistently, yet too weakly to induce employers to hire aggressively.
“The economy is picking up momentum as we close out 2011,” said Neil Dutta, an economist at Bank of America Merrill Lynch. At the same time, it faces “an ongoing flu in Europe” and other challenges, such as uncertainty about future taxes and spending in the United States, Dutta said.
For now, factories are expanding. The Institute for Supply Management, a trade group of purchasing managers, says its manufacturing index rose to 52.7 in November, up from 50.8 in October. Any reading above 50 indicates expansion. Factories have grown for 28 straight months.
Manufacturers are slightly more hopeful about the next few months because of cheaper raw materials and healthy demand, said Bradley Holcomb, head of the ISM’s survey committee.
Still, he said, companies have tempered their outlook because of concerns about whether the economy will grow consistently, uncertainty about federal taxes and regulation and fear that Europe’s debt crisis may trigger a global economic panic.
Mark Vitner, an economist at Wells Fargo, suggested that employers are reluctant to hire freely because the U.S. economy’s future appears hazy.