R-word worries take a holiday

Factory activity in the Midwest slowed a little in August and private employers continued to hire despite extreme financial market turmoil, easing fears the economy would fall back into recession.

Other data showed a strong rebound in demand for manufactured goods in July as orders for motor vehicles posted their largest gain since 2003, another suggestion a recession could be avoided despite some weak economic signals.

“For those of us who don’t believe the economy is in a free fall, we have got some support,” said David Resler, chief economist at Nomura Securities International.

The Institute for Supply Management-Chicago said its business barometer fell to 56.5, the lowest since November 2009, from 58.8 in July. However, the reading was above economists’ expectations and indicated activity continued to grow.

A separate report from payrolls processor ADP showed private employers added 91,000 new jobs this month after expanding payrolls by 114,000 in July.

The ADP figures come ahead of the US government’s much more comprehensive labor market report tomorrow, which is expected to show a modest increase in employment, despite the damping effect of a strike at Verizon Communications.

While the ADP report has a poor track record of predicting nonfarm employment, it offered hope businesses had not pulled back sharply on hiring despite a big stock market sell-off and a loss of both business and consumer confidence.

Other data showed the number of planned layoffs declined in August after rising for three months in a row, although the cuts were well above year-ago levels.

Strong demand for cars helped lift orders for manufactured goods by 2.4 percent in July, the Commerce Department said. Factory orders had fallen 0.4 percent in June.