Manufacturing data from two Federal Reserve districts showed signs of improvement, with the New York manufacturing index hitting 12.08 and the Philadelphia manufacturing index coming in at 4.2. And the recent manufacturing survey conducted by the Institute for Supply Management posted its first expansionary reading since January 2008, indicating an inventory rebuild.

The National Association of Homebuilders/Well Fargo Housing index rose from 17 to 18, while existing home sales shot up 7.2 percent in July to a seasonally adjusted annual rate of 5.24 million units. Depressed prices and tax credits are luring potential buyers out of the woodwork, buoying sales across the real estate spectrum.

Housing starts fell to 581,000 from 587,000, well short of consensus estimates. Permits declined from 570,000 to 560,000. Many commentators are spinning the data as a negative sign, which it is in the short term. But, over the long term, less building activity will eventually translate into price support, especially with the supply of new homes on the market at a 16-year low.

In the meantime, with 9.24 percent of mortgages currently delinquent, housing inventories will continue to grow. Despite the uptick in purchases, the supply of existing homes on the market remained at 9.4 months in July.

And foreclosures will remain an issue as job losses continue. Initial claims rose to 576,000 from an upwardly revised 561,000, while continuing claims ticked up slightly to 6.2 million.

Even as industry ramps back up, given the volume of productive capacity that had been slowed or shuttered, it will take time for hiring to resume. A 25 percent decline in S&P 500 earnings in the second quarter suggests that many companies will wait to see positive sales growth before adding to payrolls.

I continue to expect a pullback in the market this fall, but I think that will present an excellent buying opportunity–economic data continue to point towards recovery.

Meanwhile, there are still excellent opportunities for investors. On page 6 we looked at a self-service kiosk operator that’s benefiting from penny-pinching consumers, and on page 7 we profile one of the nation’s leading garbage haulers and processors. “Fund Favorites” highlights a closed-end fund that makes it easy to invest in a diversified group of high-yielding master limited partnerships. “Best Bond Buys” focuses on three ways to hedge your portfolio against inflation. And on page 11 we highlight three health care-related funds that should produce healthy returns.