Corporate layoffs remain very low

According to the folks at Challenger, Gray & Christmas, large, publicly announced corporate layoffs are almost a thing of the past. The first step toward an expanding labor force is to stop firing people, and we've met that condition in spades, according to this report. And of course this is one more of many signs that there is no double-dip recession in progress, nor is there any imminent threat of one.

Construction spending remains weak

Residential construction spending slipped a bit in July, but since it only represents less than 2.5% of GDP, that's a drop in the bucket. Nonresidential spending also slipped, but I don't know anyone who expected it to strengthen; there's still plenty of idle capacity out there. Construction remains the weakest sector in the economy, but it no longer poses a serious threat to the overall GDP growth. The economy has been very busy in recent years shifting massive amounts of resources away from construction and into other sectors. This is a major rotation effort that will probably require a bit more time to be complete.

Manufacturing activity continues strong

The August ISM manufacturing index came in quite a bit stronger than expected, refuting some recent and scattered signs of a slowdown in activity. Indeed, this index (above) strongly suggests that the relatively tepid GDP growth in Q2 was an anomaly, and that we should see stronger growth in the second half of the year.

The export orders index slipped marginally, but remains comfortably above 50, suggesting ongoing expansion in that sector of the economy.

The prices paid index moved a bit higher, reflecting, as it has for quite some time, a gradual buildup of inflation pressure that is undoubtedly being driven by rising commodity prices. It also continues to signal that deflation is nowhere to be seen.

The strongest part of the report was the employment index, which has reached a level that was last seen at the end of 1983, when the economy was embarked on the Reagan boom. This also counters the relatively weak ADP employment number released today.

The bears will have to go through contortions to explain away the across-the-board good news from this report.