Fed Improves Economic Forecast
"Federal Reserve officials have a slightly brighter view of the economy than they did at the start of the year," updating their forecast that "the economy can grow between 3.2 percent and 3.7 percent this year" from the 2.8 percent to 3.5 percent they predicted in January, the Associated Press reported last week.

"The Fed's latest forecast sees the unemployment rate, now at 9.9 percent, dipping to between 9.1 percent and 9.5 percent by year's end," the AP continued. "Previously the Fed predicted unemployment wouldn't fall below 9.5 percent."

The revised forecast "highlights the gathering strength of the recovery," the Washington Post says.

Still, "members of the Fed panel expressed concern that belt-tightening across Europe could jeopardize the economic recovery," Agence France-Presse notes.

Although "Fed leaders and private economists also see an emerging risk from the European debt crisis," the Post asserts that "its impact on the U.S. economy remains hard to predict." It could make financial markets fearful or slow exports, but it also could attract investors to the U.S. "as a safer place to park their money" and "depress the price of oil, making it cheaper for American consumers to gas up their cars or heat their homes."

Meanwhile, "inflation has essentially disappeared," giving the Federal Reserve "more room to keep interest rates at record lows," according to a separate AP report. "The Fed now appears more likely to keep rates at record-low levels well into next year," according to economists.

Economists now forecast the pace of U.S. growth to pick up in the year ahead as consumers and businesses alike accelerate spending. In survey results released today, the National Association for Business Economics (NABE) boosted 2010 growth expectations to 3.2 percent for real GDP from 3.1 percent in its February forecast. The NABE panel is also forecasting a 3.2 percent pace of real GDP growth for 2011.

Jobless Claims Surge Unexpectedly
New initial jobless claims rose in the latest week reported, according to the U.S. Department of Labor. Seasonally adjusted unemployment claims for the week ending May 15 reached a total of 471,000, an increase of 25,000 from the previous week's revised figure of 446,000 and the largest weekly increase in three months. The four-week moving average was 453,500, a 3,000 increase from the previous week's average.

The surge in new claims was surprising, as the average analyst forecast from Agence France-Presse expected a drop to 439,000 jobless claims for the week. MarketWatch expected a similar decline to 440,000. The total was the highest level since the 480,000 claims reached in early April.

"A Labor Department economist said Thursday that, unlike early April, when jobless claims surged due to seasonal and holiday factors, this time there was no indication any special factors were at work," the Wall Street Journal says.

Despite the negative signs, broader trends indicate that hiring rates are improving, although not at a pace sufficient to reverse concurrent job losses. An added concern is the number of former job seekers who have returned to the job market, elevating the overall unemployment rate.

"Employers are hiring again, but not at levels needed to make a dent in the unemployment rate, which increased in April to 9.9 percent," the Associated Press reports. "An improving economy has lured those who had given up looking for work back into the labor market. The jump in the unemployment rate came even though payrolls rose last month by 290,000 jobs, the biggest gain in four years."

Workholding Equipment Shipments Up
Valued at $50 million, shipments of workholding equipment in the first quarter of this year were up 10.7 percent over Q1 2009, according to the Association for Manufacturing Technology's Advanced Workholding Technologies (AWT) Group. Based on data from 38 companies that produce chucks, jaws, collets, vises, fixtures and other workholding equipment, shipments within the U.S. totaled $42.6 million while exports amounted to $7.4 million.

The AWT report shows that domestic workholding equipment shipments increased 13.6 percent and U.S. exports decreased 15.5 percent from Q4 2009.

Among the regional results: shipments in the Midwest rose 7.5 percent from Q4 2009 to Q1 2010; workholding shipments in the Central region rose 24.7 percent during the period; shipments to the Northeast region fell 6.1 percent in Q1 2010; the South recorded a 14.4 percent increase over Q4 2009 shipments; and the West demonstrated "a remarkable 34.2 percent increase" from Q4 2009.

Heavy-Truck Orders Continue to Rebound
Net new orders for heavy-duty commercial trucks increased 91 percent in April over the same month last year, while year-over-year net orders for medium-duty vehicles rose 39 percent in April, according to transportation tracking firm ACT Research last week.

"From top to bottom, April was a healthy month for the Class 8 [heavy truck] segment, at least in relative terms," Kenny Vieth, a partner and senior analyst with ACT, said. "Orders were above expectations, backlogs rose and retail sales remained elevated. If orders surprise on the high side again in May, it could have upside implications for our forecasts for the remainder of 2010 and 2011."

In a separate report released earlier this month, ACT increased its forecast for heavy-duty truck production by 6,000 units in 2010, anticipating 19 percent year-over-year growth. The 2011 forecast increased by 3,000 units and raised year-over-year growth expectations to 67 percent.

Automotive research firm WardsAuto.com had more modest results for April, stating that medium- and heavy-duty truck sales rose 10.8 percent year-over-year, with Class 8 vehicles showing the strongest gain of 29.5 percent.

Much of the future growth in the large commercial vehicle industry may depend on the housing and construction markets, which significantly influence demand.