Economic Reports Signal Momentum
America’s service sector expanded with gusto in April and the country’s factories saw orders shoot up in March by the largest amount in nearly a year, fresh evidence that the economy was pushing ahead at a good clip into spring.
The Institute for Supply Management reported Wednesday that its index of service-sector activity stood at 63 last month, up from 60.5 in March. A reading of 50 or above points to a growing service sector, and a figure below 50 signals contraction. April’s showing was better than the 59.2 reading analysts had expected.
“Services industries kicked off the second quarter with very impressive momentum,” said Brian Bethune, an economist with Global Insight.
Fourteen of the 17 service sectors that the institute’s index measures showed increased activity in April.
Also Wednesday, the Commerce Department said new bookings placed with manufacturers jumped 4.2% in March, a notable pickup from the 0.4% increase registered in February.
The 4.2% gain was the best showing since May 2005, when factory orders rose the same amount. The performance was far better than the 1.5% rise economists had expected.
The latest snapshot of factory activity indicated that the strength seen in March was fairly broad-based. Orders rose for a wide variety of durable goods, including commercial aircraft, machinery, metals, cars and computers. Demand also picked up for nondurables, including food and apparel.
“This robust report suggests that the vigorous pace of factory activity ... may not moderate significantly in the near term,” said Michelle Girard, an analyst with RBS Greenwich Capital.
Orders for all durable goods -- costly manufactured products expected to last at least three years -- went up 6.5% in March. That surpassed February’s 3.5% and was the largest increase since May 2005.
New bookings for nondurable items increased 1.5% in March, a turnaround from the 3.1% drop reported for February.
Wednesday’s factory report came on the heels of other data indicating that factories were humming heading into spring.
The Institute for Supply Management reported Monday that manufacturing grew briskly in April. The group’s manufacturing index jumped to 57.3 in April from 55.2 in March, the strongest showing in six months.
So far, the economy is carrying strong momentum despite rising energy prices and interest rates.
For the first quarter, the economy grew at a 4.8% pace, the fastest in 2 1/2 years. In the current April-through-June quarter, growth is expected to slow to the 3% range, which would still be healthy, as consumers moderate their spending.
