Manufacturers see better times for economy, jobs

NEW YORK (AP) - Companies are finally starting to spend some of the cash they've been sitting on, and that could mean a stronger economy and more jobs are on the way.

Industrial companies such as General Electric, Honeywell and Caterpillar have been posting strong financial results in recent weeks and telling investors that orders are strong.

That means other large companies are investing in expensive equipment they need to grow their business, economists say.

"We're on the brink of that inflection point where the economy can really take off," says Diane Jaffee, a portfolio manager and managing director at the Trust Company of the West. "What's different now is that the industrial companies are saying there is real demand."

In the years since the Great Recession, big manufacturers have cut costs, slimmed down their operations, and accumulated cash. They've had to because their customers - other big businesses - were too worried about some part of the global economy to hire people or buy equipment that takes years to pay off.

Political wrangling in the U.S. shut down the government and led the country to nearly default on its debt - more than once - even as the U.S. economy was struggling to improve. At the same time, the enormous European economy was mired in a debt crisis and a subsequent recession.

Now, finally, the economies of the U.S. and Europe are showing steady progress, and while Chinese growth appears to be slowing, it remains strong.

"U.S. gets a little bit better every day. Europe is improving. The growth markets continue to expand and will provide growth during the year even with volatility," General Electric CEO Jeff Immelt told investors last week.

GE's results reflected that growth. Revenue from its existing industrial divisions rose 8 percent in the quarter, an extremely strong performance, led by a 12 percent rise in equipment sales. And customers placed some large orders. For example, the South African rail company Transnet ordered 233 locomotives, valued at $700 million, and Air France ordered $1.7 billion worth of aircraft engines. That equipment will be manufactured in the U.S.

"Many companies are just more confident in the business climate this year than they were last year," says Jim Russell, senior equity strategist at U.S. Bank Wealth Management.

Concerns that the frigid winter would set the economy back have all but dissipated. It certainly hurt, but things seem to have snapped back quickly.

The Commerce Department reported Thursday that demand for core capital goods, considered a good guide for business investment plans, rose 2.2 percent in March after a 1.1 percent drop in February. It was the best showing since November.