''Service Industries in U.S. Probably Expanded at Fastest Pace in Four Years"
Service Industries in U.S. Probably Expanded at Fastest Pace in Four Years - Bloomberg
Service industries probably expanded in April at the fastest pace in almost four years, showing the U.S. recovery is broadening, economists said before reports today.
The Institute for Supply Management’s index of
non- manufacturing businesses, covering almost 90 percent of the economy, rose to 56, the highest level since May 2006, according to the
median forecast of 76 economists surveyed by Bloomberg News. Another report may show companies added jobs in April.
“The economy really is humming along,” said
Zach Pandl, an economist at Nomura Securities International Inc. in New York. “There are much fewer pockets of weakness. A hiring recovery should not be far behind.”
Growing employment may help sustain the rebound in
consumer spending that is lifting companies from
MasterCard Inc. to railroads owned by
Warren Buffett’s Berkshire Hathaway Inc. Manufacturing isn’t the only area that will benefit from the global economic rebound as businesses like
United Parcel Service Inc. also see sales rising even faster overseas.
The Tempe, Arizona-based ISM’s figures are due at 10 a.m. New York time. Estimates in the Bloomberg News survey ranged from 53.7 to 57.2. Readings above 50 signal expansion.
A report from ADP Employer Services due at 8:15 a.m. may show businesses added 30,000 jobs in April, the data’s first gain since January 2008.
Jobs Outlook
Economists forecast a Labor Department report May 7 will show the U.S. added 189,000 jobs in April and the
unemployment rate held at 9.7 percent, according to the median projection in a Bloomberg News survey. The ADP report doesn’t include government jobs, meaning it will not pick up a projected jump in federal hiring of temporary workers to conduct the census.
More jobs will probably lead to more spending. Consumer purchases in the U.S. rose 0.6 percent in March, the most in five months, the Commerce Department said May 3.
Incomes rose for the first time this year, the report showed.
As demand has risen, investors are gaining more confidence in retail companies. The Standard & Poor’s Supercomposite
Retailing Index has climbed 15 percent this year, almost three times the 5.2 increase of the broader S&P 500 Index.
MasterCard, the world’s second-biggest electronic payments network, posted a first-quarter profit that beat most analysts’ estimates as consumer spending rebounded and expenses were held in check. A slide in U.S. credit-card spending, which fell 3.1 percent to $110 billion, may have reversed toward the end of the quarter, according to outgoing Chief Executive Officer
Robert W. Selander.
April Gains
“During the month of March, we saw positive growth in processed U.S. credit volume for the first time in approximately 18 months,” Selander said in a conference call with analysts yesterday. “This trend continued through the first four weeks of April.”
Buffett acquired Fort Worth, Texas-based Burlington Northern Santa Fe Corp. in February as an “all-in wager” on the U.S. economy, the 79 year-old investor said at a May 2 press conference.
“American business is improving from everything I can see,” he said.
Berkshire, which cut more than 20,000 jobs last year, is adding staff as the recovering economy boosts demand at its industrial units, Buffett said.
Other companies are benefiting from the rebound in international sales.
UPS, the world’s largest package-delivery company, last month posted first-quarter sales that beat analysts’ estimates on increased demand overseas. The company had an 18 percent increase in international packages, while U.S. shipments rose 0.4 percent, which was the first gain in more than two years. Retail, health-care and technology demand helped boost domestic volumes, Chief Financial Officer
Kurt Kuehn said in an interview on April 27.
Manufacturing last month expanded at the fastest pace since 2004, according to the ISM’s factory survey issued this week.
Thank you President Obama!