PURCHASING's 30-day Forward Demand Index for semiconductors rallied to 56.6 in September after slipping below 50 (indicating negative demand growth) in August. While it's too soon to call it a trend, the corroborating data look good. For example, PURCHASING's Business Activity Index for electronics-consuming companies rose four points in September, while PURCHASING's index tracking electronics buyers' 90-day purchasing plans gained another point as well

Saber rattling by President Bush, rising oil prices, still-sliding stock prices, plus manufacturing supply-chain and retail commerce disruptions caused by the West Coast port strike have some economic forecasters hedging their bets on the negative side this month. Morgan Stanley, for example, just knocked down its 2003 real GDP forecast by three tenths of a point to 2.7%. "What worries us is that many of the headwinds creating uncertainty and rising risk aversion don't seem likely to ebb quickly." Still, the forecasters see continued growth and not a return to recession. The positives: low interest rates, latent effects of fiscal stimulus, and steady improvement in corporate balance sheets.

The Economic Cycle Research Institute's (ECRI) Weekly Leading Index continued to slide in early October, falling eight tenths of a point in the latest week to a growth rate of -1.2% (from -0.1% in the week prior). While ECRI remains steadfast in its view that the decline does not signal a return to recession, it predicates the opinion on business confidence remaining strong enough to preclude another large round of job layoffs.

Unemployment rate was flat in September, according to the Bureau of Labor Statistics, and there's some indication that the worst is past on the job loss front. A recent survey by Washington, D.C.-based BNA Inc. finds that "While the hiring outlook is relatively bleak, workers' risk of job loss has held mostly steady over the past few quarters." Nine percent of employers plan to cut production/service staff in Q4, 5% plan Q4 cuts for office/clerical workers, and 6% will reduce their technical/professional workforces. While the figures are slightly above forecast, BNA says they are "identical to the proportion recorded six months ago."

More bad news for computer and capital equipment makers. Only 11% of CEOs surveyed by the Conference Board (CB) in third quarter say capital spending plans have in-creased since January while 38% continue to scale back. Still, CB says it's an improvement from last year's survey when only 8% had increased spending plans and 47% had scaled back.