The institute for Supply Management's report that its closely watched Purchasing Manager's Index (PMI) increased in August "is the first evidence that the manufacturing recovery continued to pick up speed," says Jerry Jasinowski, president of the National Association of Manufacturers (NAM). "Not only is August's 54.7 index the highest level so far in 2003, but it's also the fourth consecutive increase in a row-an important sign that manufacturing is regaining momentum after dropping off during the first half of the year."

Throughout 2002 and the first half of this year, the manufacturing recovery has been weak because of weak exports and sluggish overall business investment, Jasinowski says. "New orders, production and exports reached four-month highs, providing positive signs of overall economic recovery in the second half."

However, the ISM's manufacturing employment index continued to hover at 45.9, signaling that an employment recovery is not yet in the cards. But "with production increasing, I expect manufacturing employment to stabilize in the months to come and show a modest recovery in 2004," Jasinowski says.

A preliminary Commerce Department report released at the end of August says that the pace of economic activity more than doubled to 3.1% growth in the second quarter from 1.4% in the first quarter.

The Commerce Department makes clear that overall economic growth was significantly more robust in the second quarter than the 2.4% growth initially reported in its advanced report issued in July.

"The upward revision shows that consumer spending and business investment grew faster than originally estimated," Jasinowski says. "Also, the department reported that the second quarter decline in exports was much less than earlier thought, which means exports are poised to rise."

"Today's report also shows that corporate profits increased by 10.8% in the second quarter compared to the first quarter, which was a robust jump compared to the 0.2% average increase during the previous five quarters," Jasinowski says. "In addition, corporate cash flow increased by $78 billion, an increase from the $10 billion average decline since the end of the recession in 2001. This shows that businesses are finally getting the funds needed to invest in plants and equipment."