Decoding The Data

Reuters Business Report - How's the U.S. economy doing? It depends where you look..

U.S. manufacturing activity contracted in May- for the first time in 6 months. Activity is at its lowest level in nearly 4 years. New orders slipped and there was less demand for exports.

But that comes on the heels of a private report showing U.S. manufacturing activity expanded at a steady, modest pace- and supported the overall economy.Chase Private Client Chief Economist Anthony Chan:

ANTHONY CHAN, CHIEF ECONOMIST, CHASE PRIVATE CLIENT GROUP:

"The ISM survey and the Markit PMI surveys are a bit different. They don't use the same people in the survey and of course they are weighted differently. But by and large these two surveys tend to have different reliability factors. By that I mean the Markit historically-, even though it hasn't been around that long, tends to have a stronger relationship with Industrial Production than the ISM survey. So given that fact I am certainly putting at least a little more weight on the Markit survey than the ISM at this time."

Yet another report showed construction spending rose- but not as much as expected.

The rise was because of higher business spending.

Spending is also up on cars- auto sales came in strong in May- thanks to a surge in pickup trucks.

It's an economic conundrum:

IHS Global Insight Chief Economist Nariman Behravesh:

NARIMAN BEHRAVESH, CHIEF ECONOMIST, IHS GLOBAL INSIGHT:

"It is a little confusing. I think one way to look at it is sort of a private- public sector split. The private sector is going fairly strongly and without any of that fiscal contraction, we'd probably been growing close to say three percent. But the tax increases and the sequester combined will reduce growth for a full percentage point this year to around two percent. So it's a number of sectors are getting hit particularly hard by the sequester, defense spending for example."

The data deluge has the financial markets scratching their heads - trying to decode what all the information means- for the Fed. Bad news on the economy is cheered- because it means easy monetary policy will continue. The reverse is true for good news on the economy.

NARIMAN BEHRAVESH, CHIEF ECONOMIST, IHS GLOBAL INSIGHT:

"One way to sort of understand what is going on is in fact the anxiety about what exactly is the Fed going to do what does that mean for interest rates, what does that mean for availability of liquidity. So I think that is where the markets are right now. "

All this amps up the attention on Friday's jobs report. Reuters estimates are for 170,000 new jobs, and for the rate to hold steady at 7.5 percent.