US Treasury Secretary Paul O'Neill has said that signs were emerging of a long-awaited recovery in investment by US businesses. 'There are signs that business investment, so far the missing ingredient in this recovery, is picking up,' O'Neill said in New York.
US Federal Reserve chairman Alan Greenspan has repeatedly said the sustainability of the US recovery depends on a pick-up in final demand - business investment, exports and consumer spending.
While consumers have managed to maintain expenditure, the economy is still waiting for businesses to accelerate investment, provoking uncertainty about the speed of the recovery.
But O'Neill said he was optimistic. 'The fundamentals of our economy continue to be strong,' he said. 'The recent economic slowdown proved to be the briefest and shallowest in post-War history.'
US President George W Bush's tax relief, lower interest rates and the resilience of US consumers, businesses and the financial sector would deliver economic growth of 3-3.5% by the end of this year, O'Neill said.
'Most encouraging to me, American productivity growth continues to soar,' he said. 'Most important to the president and this administration, unemployment fell to 5.8% last month and the number of new jobs grew for the second month in a row.'
The labour market figures were encouraging, O'Neill said. 'Last month's improvement is welcome but we believe we can do better.'
