What's going on?

There have been a few economic reports recently that suggest the manufacturing economy in the US might be stabilizing. The latest came out on Thursday: orders for durable goods � things that are made to last more than three years, like engines and washing machines � rose 4.9%. That�s the biggest monthly gain in 10 months.

What does this mean?

Manufacturing in the US has been in a recession: activity has been�shrinking. Thursday�s data is a sign that activity is starting to increase again. This follows �industrial production� data last week � that�s a measure of output from manufacturing, mining and utility companies � that showed a rise in January after 3 straight months of declines. Taken together, the news is certainly starting to look more positive for US manufacturing.

Why should I care?

The bigger picture: Manufacturing might be more important than people often think. It�s true that manufacturing accounts for only about 12% of the economy � but there are a lot of services that depend on manufacturers for their business (like lawyers and accountants for example). When manufacturing firms make more money, they tend to do things (like buy smaller manufacturing firms perhaps) that create work for the non-manufacturing sector.

For markets: This could be good for the US economy � which should be good for stocks. The manufacturing sector has been struggling for almost a year now. Some think that the weakness has fed into the bigger part of the economy: �services.� Indeed, yesterday saw very weak services data. If it is manufacturing that has caused the service sector to slow down, perhaps a (slightly) rebounding manufacturing sector will, eventually, help stabilize the apparently weakening service sector.