Services in U.S. Probably Grew at Fastest Pace in Three Months
January 05, 2012, 4:52 PM ESTBy Bob Willis
Jan. 5 (Bloomberg) -- Service industries in the U.S. probably grew in December at the fastest pace in three months, showing the economy picked up as 2011 drew to a close, economists said before a report today.
The Institute for Supply Management’s index of non- manufacturing industries, which account for about 90 percent of the economy, rose to 53 from 52 in November, according to the median projection of 65 economists surveyed by Bloomberg News. The number of applications for jobless benefits fell last week, another report may show.
Services, which include everything from retailers to construction companies, benefitted from a pickup in consumer spending during the holidays. Combined with data showing manufacturing grew at the fastest pace in six months, the figures signal the world’s largest economy is withstanding the European debt crisis.
“The service sector is holding its own,” said Jonathan Basile, a U.S. economist at Credit Suisse in New York. The industry “is weathering the storm that’s happening in financial markets and in Europe.”
The Tempe, Arizona-based group’s data are due at 10 a.m. Estimates in the Bloomberg survey ranged from 52 to 55. Fifty is the dividing line between expansion and contraction. The services gauge has averaged 53.1 since the recession ended in June 2009.
A rebound in the labor market has helped bolster sales and lift sentiment. Figures from the Labor Department tomorrow may show the economy generated 150,000 jobs in December after 120,000 the prior month, according to economists surveyed by Bloomberg News. The unemployment rate rose to 8.7 percent after falling to 8.6 percent a month earlier, according to the forecasts.
Private Employment
The employment report may also show private employment, which excludes government jobs, climbed 175,000 last month after a 140,000 gain.
Initial jobless claims declined to 375,000 last week from 381,000 the prior period, according to the median estimate of economists surveyed by Bloomberg before Labor Department figures today at 8:30 a.m.
Signs the economy picked up in the final months of 2011 have bolstered share prices. Since a recent low on Nov. 25, the Standard & Poor’s 500 Index has gained 10 percent.
As the labor market perks up, Americans are becoming more comfortable spending. Retail sales at stores open more than a year may have gained as much as 4.5 percent in December, more than previously estimated, as discounts attracted holiday shoppers, the International Council of Shopping Centers said in a statement yesterday.
December Auto Sales
Demand at Ford Motor Co., General Motors Co. and Chrysler Group LLC exceeded analysts’ forecasts in December, other data showed yesterday. Ford’s U.S. sales climbed 10 percent from a year earlier, while purchases of Chrysler vehicles were up 37 percent. At GM, they increased 4.5 percent from a year earlier.
“The growth we’re seeing is still based on” a slow increase in jobs, Don Johnson, vice president at GM for U.S. sales, said on a conference call with analysts. “Consumers are more confident and other underpinnings of our economy are either stable or slowly improving.”
Consumer confidence climbed to an eight-month high in December, according to Conference Board figures last month.
The service industry report follows the group’s manufacturing data this week that showed an acceleration in orders and production. The ISM’s index climbed to 53.9 last month from 52.7 in November.
“The economy has been expanding moderately, notwithstanding some apparent slowing in global growth,” Federal Reserve policy makers said Dec. 13 after their latest meeting.
--With assistance from Chris Middleton in Washington. Editors: Vince Golle, Carlos Torres
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
