Service Industries in U.S. Expanded at Faster Pace in August# Stock
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Sept. 6 (Bloomberg) -- Service industries unexpectedly expanded at a faster
pace in August, easing concern the biggest part of the U.S. economy was
slumping.
The Institute for Supply Management’s index of non- manufacturing
businesses increased to 53.3 last month from 52.7 in July. Economists
forecast the gauge would drop to 51, according to the median estimate in a
Bloomberg News survey. A reading above 50 signals expansion.
A pickup among the non-manufacturing industries that account for about 90
percent of the economy shows the recovery may persist amid dimming job
prospects and rising pessimism about the economic outlook. Federal Reserve
Chairman Ben S. Bernanke said last month that the economy will probably
improve in the second half of this year.
“While the market and gauges of sentiment have been telling us growth and
economic demand had fallen off a cliff, the underlying economy has
persevered fairly well through this period,” Russell Price, senior
economist at Ameriprise Financial Inc. in Detroit, said before the report,
citing retail spending, auto sales and initial jobless claims.
Estimates for the index from 74 economists ranged from 49 to 53.5. The Tempe
, Arizona-based group’s measure, which covers about 90 percent of the
economy, averaged 56.1 in the five years to December 2007, when the last
recession began.
The index of new orders increased to 52.8 from 51.7 the prior month. A gauge
of business activity fell to 55.6 from 56.1 in July. The measure of prices
paid increased to 64.2 from 56.6.
Services Employment
The group’s employment index declined to 51.6, the lowest since September
2010, from 52.5 a month earlier.
The ISM services survey covers industries ranging from utilities and
retailing to health care and finance. Today’s report follows the group’s
Sept. 1 figures that showed manufacturing unexpectedly expanded in August,
allaying concern the world’s largest economy is headed for another
recession.
A struggling labor market and economic growth that slowed in the first half
of the year have weighed on sentiment, prompting Americans to limit
purchases of non-essential goods and services.
The Conference Board’s index of consumer confidence dropped last week to
the lowest level since April 2009, and the Bloomberg Consumer Comfort Index
has been stuck below minus 40 since the end of February, the level
associated with recessions.
August Payrolls
Employment unexpectedly stagnated in August as employers became less
sanguine about the strength of the recovery. Private payrolls, which exclude
government agencies, rose 17,000 in August, the smallest gain since a
decrease in February 2010. The jobless rate held at 9.1 percent, and
earnings and hours worked declined, reducing the income of consumers whose
spending accounts for 70 percent of the economy.
President Barack Obama has requested a joint session of Congress on Sept. 8
to unveil his proposals to promote job growth. Obama said in a letter to
House Speaker John Boehner that the nation faces “unprecedented” economic
challenges.
Rising prices have also hurt consumer buying power. An Aug. 29 Commerce
Department report showed that the income left after taking out taxes and
adjusting for inflation dropped 0.1 percent in July, the first decrease
since September 2010.
“I continue to see customers who are still struggling,” Rick Dreiling,
chief executive officer of Goodlettsville, Tennessee-based Dollar General
Corp. said in Aug. 30 call with analysts. “The macroeconomic environment
has remained difficult for consumers who continue to face high unemployment
rates, high gasoline and high food costs.”
--With assistance from Chris Middleton in Washington. Editor: Vince Golle
To contact the reporter on this story: Alex Kowalski in Washington at
a*********[email protected]
To contact the editor responsible for this story: Christopher Wellisz at
c******[email protected]
pace in August, easing concern the biggest part of the U.S. economy was
slumping.
The Institute for Supply Management’s index of non- manufacturing
businesses increased to 53.3 last month from 52.7 in July. Economists
forecast the gauge would drop to 51, according to the median estimate in a
Bloomberg News survey. A reading above 50 signals expansion.
A pickup among the non-manufacturing industries that account for about 90
percent of the economy shows the recovery may persist amid dimming job
prospects and rising pessimism about the economic outlook. Federal Reserve
Chairman Ben S. Bernanke said last month that the economy will probably
improve in the second half of this year.
“While the market and gauges of sentiment have been telling us growth and
economic demand had fallen off a cliff, the underlying economy has
persevered fairly well through this period,” Russell Price, senior
economist at Ameriprise Financial Inc. in Detroit, said before the report,
citing retail spending, auto sales and initial jobless claims.
Estimates for the index from 74 economists ranged from 49 to 53.5. The Tempe
, Arizona-based group’s measure, which covers about 90 percent of the
economy, averaged 56.1 in the five years to December 2007, when the last
recession began.
The index of new orders increased to 52.8 from 51.7 the prior month. A gauge
of business activity fell to 55.6 from 56.1 in July. The measure of prices
paid increased to 64.2 from 56.6.
Services Employment
The group’s employment index declined to 51.6, the lowest since September
2010, from 52.5 a month earlier.
The ISM services survey covers industries ranging from utilities and
retailing to health care and finance. Today’s report follows the group’s
Sept. 1 figures that showed manufacturing unexpectedly expanded in August,
allaying concern the world’s largest economy is headed for another
recession.
A struggling labor market and economic growth that slowed in the first half
of the year have weighed on sentiment, prompting Americans to limit
purchases of non-essential goods and services.
The Conference Board’s index of consumer confidence dropped last week to
the lowest level since April 2009, and the Bloomberg Consumer Comfort Index
has been stuck below minus 40 since the end of February, the level
associated with recessions.
August Payrolls
Employment unexpectedly stagnated in August as employers became less
sanguine about the strength of the recovery. Private payrolls, which exclude
government agencies, rose 17,000 in August, the smallest gain since a
decrease in February 2010. The jobless rate held at 9.1 percent, and
earnings and hours worked declined, reducing the income of consumers whose
spending accounts for 70 percent of the economy.
President Barack Obama has requested a joint session of Congress on Sept. 8
to unveil his proposals to promote job growth. Obama said in a letter to
House Speaker John Boehner that the nation faces “unprecedented” economic
challenges.
Rising prices have also hurt consumer buying power. An Aug. 29 Commerce
Department report showed that the income left after taking out taxes and
adjusting for inflation dropped 0.1 percent in July, the first decrease
since September 2010.
“I continue to see customers who are still struggling,” Rick Dreiling,
chief executive officer of Goodlettsville, Tennessee-based Dollar General
Corp. said in Aug. 30 call with analysts. “The macroeconomic environment
has remained difficult for consumers who continue to face high unemployment
rates, high gasoline and high food costs.”
--With assistance from Chris Middleton in Washington. Editor: Vince Golle
To contact the reporter on this story: Alex Kowalski in Washington at
a*********[email protected]
To contact the editor responsible for this story: Christopher Wellisz at
c******[email protected]