3 signs the economy is rebounding

Looking for the light at the end of the tunnel? Watch for these signs that the economy is bouncing back.

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By Janice Revell, Money Magazine senior writer

1. Managers say things are looking up
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(Money Magazine) -- Why it matters: The stock market and the President's economic team have been flashing hopeful signs, but what really matters is whether companies are feeling positive about their prospects. When they do, they'll expand, which boosts economic growth.

What to watch: The best measure of business sentiment is the Institute for Supply Management's nonmanufacturing index (find it at ism.ws). The rebound has arrived when the index hits 50 and stays there, says economist Nariman Behravesh.

Recent reading: Grim. In March the index was 40.8, down from 41.6 the prior month.

2. Housing supply starts to shrink

Why it matters: The real estate collapse is what led us into this recession, and we can't emerge until housing turns around.

What to watch: Inventory data from the National Association of Realtors (realtor.org; click the Research section). You want to see the supply of unsold homes at about six months.

Recent reading: Slowly improving. At the end of March there was less than a 10-month supply, down from 11 months in the fall.

3. Temps, temps, everywhere

Why it matters: When business first picks up, companies bring in temporary employees, holding off on full-time hires until they're sure of a recovery.

What to watch: The ASA staffing index (americanstaffing.net; click on Staffing Statistics), which shows weekly changes in the number of temp workers. It's a good sign if it rises for at least three consecutive months.

Recent reading: The index has been flat since February, but at least it's not falling.  To top of page

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