Data signal strength in the economy
Growth in the U.S. service sector rose unexpectedly in June, while the job market also appeared to pick up some steam, according to reports Thursday that signaled strength in the economy.
The Institute for Supply Management’s services index rose to 60.7 in June from 59.7 in May. Analysts had expected the index to ease to 58.
A number above 50 indicates growth in the sector.
The survey’s employment index edged up to 55 -- its highest in just over a year -- from 54.9 in May. Its new-orders index eased.
“It’s good news for the economy. It shows the services sector is continuing to do well,” said David Wyss, chief economist at Standard & Poor’s in New York. “The manufacturing report also came in very strong. Between the two of them, things are looking pretty good for the economy right now.”
The Institute for Supply Management on Monday had reported that manufacturing growth accelerated in June.
A number of reports on job trends in the United States offered evidence of continued strength in the labor market, albeit with some pockets of weakness.
Private employment services company ADP Employer Services said U.S. private employers probably added 150,000 jobs in June, more than the second-quarter average of 103,000 and well above the consensus forecast of a 100,000 gain.
Joel Prakken, chairman of Macroeconomic Advisers, which jointly developed the ADP report, said accelerated private sector job gains in June were consistent with an upturn in overall economic growth in early 2007.
Planned U.S. layoffs fell by 22% in June from May, as some key sectors in manufacturing, such as the automotive industry, cut far fewer workers than a month ago and a year earlier, said Challenger, Gray & Christmas Inc., an employment consulting firm.
However, the deteriorating U.S. housing market and the sub-prime mortgage sector’s woes caused cutbacks to accelerate in the financial sector, it added.
Online career and recruiting firm Monster Worldwide Inc. said its Monster employment index fell to 186 in June from 189 in May but was higher than the 171 posted a year earlier.
A government report showed that first-time applications for state unemployment insurance benefits rose to 318,000 in the week that ended June 30 from an upwardly revised 316,000 the previous week, a rise that economists took in stride.
“The job numbers look pretty good coming out of a month when we had pretty high energy prices,” said Robert Brusca, chief economist at Fact and Opinion Economics in New York.
