March 31, 2007	Saturday	Rabi-ul-Awwal 11, 1428

WASHINGTON, March 30: A raft of stronger-than-expected US economic reports on Friday, including data on personal income, inflation and manufacturing, buttressed the view that the economy was on solid footing and interest rates were unlikely to fall any time soon.

Personal income rose 0.6 per cent in February, below the unrevised 1.0 per cent gain for January but double the 0.3 per cent increase forecast by analysts in a Reuters poll.

February consumer spending also rose 0.6 per cent, outpacing forecasts for a 0.3 per cent gain after an unrevised 0.5 per cent increase in January, according to the commerce department data.

“These are a strong set of numbers right across the board.

This suggests that the consumer is a little more on solid ground than we previously realised and the prices data should keep the Fed focused on inflation rather than growth risks,” said David Sloan, economist at 4cast in New York.

Construction spending also defied forecasts for a decline as gains in non-residential building overcame drops in home and federal construction, and a Chicago purchasing managers report showed a huge pick-up in Midwest manufacturing, prompting bond traders to bet against a near-term Federal Reserve rate cut.

But adding mixed signals, a key consumer survey showed March sentiment at its lowest in six months due to worries about rising prices, while a separate business survey showed March business conditions cooling in the New York region.

Treasury debt prices eased after the data but later turned higher as investors focused on tensions in the Middle East and trade issues. Stocks initially rose before turning negative on those concerns.

The National Association of Purchasing Management-Chicago, a barometer of Midwest manufacturing, jumped to 61.7 in March from 47.9 in Feb, its highest level since early 2005. The index showed new orders soared.

“I think the Chicago PMI is an almost shockingly strong number. Some of that may reflect a rebound from weather-related effects but certainly it is a big surprise,” said Scott Brown, chief economist at Raymond James & Associates in St.

Petersburg, Florida. “Taken in context with the other data that we got, this is another negative for the bond market.”

Consumer confidence data, however, showed Americans had some concerns with the economy.

The Reuters/University of Michigan Surveys of Consumers' final March sentiment index fell to its lowest in six months as worries about rising prices and slowing income gains weighed.

The index slid to 88.4, its lowest since September, from 91.3 in February. But analysts said most of Friday's data looked strong.

“Income and spending, both higher-than-expected,” said Jeoff Hall, chief North American economist at Thomson IFR in Boston. —Reuters