More positive economic news, particularly in the manufacturing sector, is likely to buoy the stock market in the coming week and continue to push talk of burgeoning trade wars off the agenda, local economists say.

“This is another busy week for economic news,” said Alexander Paris Sr., chief economist for Barrington Research Associates. “It’s an active enough week to make people forget all about the trade wars and concentrate on the economic recovery.”

On Monday, the latest Institute for Supply Management’s manufacturing report is set to show sustained activity in November, said Paris.

Recent strong regional and Chicago purchasing management data suggest that the national index of manufacturing activity will remain unchanged from October at 57, with new orders remaining positive.

Strong equipment and durable goods orders are beginning to feed through and some goods makers are now opening new plants after hitting capacity, Paris said.

On Wednesday the ISM will also report on the services and non-manufacturing sector. Purchasing and supply executives are expected to indicate that business activity continued to increase in November, up at around 63 percent, a slightly slower rate of increase than the 64.7 registered in October but still strong, said Dana Johnson, head of research at Banc One Capital Markets.

Even more optimistic is Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson Inc. He expects several surprises, starting with total vehicle sales numbers expected Tuesday.

Car sales could jump to 5.4 million from 5.1 million in October, while truck sales could rise to 7.8 million from 7.4 million the previous month.

Just hours after Arnold Schwarzenegger was sworn in as governor of California, he fulfilled a campaign promise and rescinded a 300 percent increase in the car tax, which Wesbury expects to start feeding through to produce better sales.

“I think vehicle sales are going to be significantly higher,” Wesbury said. “Weak sales in September and October dragged down retail sales but I expect a rebound in November car sales.”

Retail sales over the Thanksgiving holiday could be up by more than 7 percent, the strongest showing in several years, Wesbury said. This view could be quickly reflected in the Bank of Tokyo-Mitsubishi, Ltd.’s increasingly influential chain store sales index due out Tuesday morning.

However, all eyes will be on the unemployment rate statistics from the Labor Department on Thursday, by consensus the most important data of the week.

Claims by unemployed have fallen sharply in recent weeks. While Paris, Johnson and Wesbury expect an unchanged headline unemployment rate of 6 percent, they do not all agree on the underlying numbers.

Both Paris and Johnson expect about 150,000 new jobs to be created in November; Wesbury sees a growth of 175,000.

None of the local experts expect manufacturing to register a positive gain, as productivity improvements continue to mean greater output with fewer jobs.

Wesbury expects manufacturing jobs to be stable, while his counterparts suggest a small decline of a few thousand jobs in the sector.

Stronger numbers could lead the Federal Reserve board to begin looking forward to when it might start “tightening” its benchmark rates, Johnson said.

Although the Fed will not make any dramatic moves when it’s open markets committee meets Dec. 9, he said, the fact that the economy is likely to grow robustly at an annual rate of between 4 and 5 percent next year will mean it may start tempering public statements about its current low rate position.

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(c) 2003, Chicago Tribune.

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AP-NY-11-28-03 1746EST