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Tags: service | napm | economy

Service Sector Probably Picked Up in November

Sunday, 04 December 2011 06:07 PM EST

Service industries in the U.S. probably expanded in November at the fastest pace in six months, a sign the economy is accelerating in the final months of 2011, economists said before a report tomorrow.

The Institute for Supply Management’s non-manufacturing index rose to 53.8 last month after 52.9 in October, according to the median forecast of 67 economists surveyed by Bloomberg News ahead of the Tempe, Arizona based-group’s data. Others reports may show consumer confidence rose this month and factory orders fell in October.

The services data may indicate broader improvement in the economy at year-end after reports last week showed a pickup in manufacturing, less consumer pessimism and declining unemployment. At the same time, risks remain that Europe’s debt crisis and slower global growth will prompt U.S. companies to cut back.

“We seem to be on more solid footing, but at the same time the external risks have risen as well,” Ellen Zentner, a senior economist at Nomura International Securities Inc. in New York.

Estimates for the services index in the Bloomberg survey ranged from 51.5 to 55. Fifty is the dividing line between expansion and contraction.

A report from the Labor Department last week showed the unemployment rate fell to 8.6 percent last month, the lowest since March 2009, from 9 percent. Payrolls climbed by 120,000 after a revised 100,000 increase in October.

Service Jobs

Employment at service-providers increased 126,000, including a 50,000 gain at retailers on hiring for holiday shopping season. The number of temporary workers rose by 22,300.

Transportation companies are joining retailers such as Kohl’s Corp. and Macy’s Inc. in boosting holiday staff.

United Parcel Service Inc. may hire 55,000 holiday workers this year, a 10 percent increase from 2010, to help with shipping gains bolstered by online shopping, the company said Nov. 7. More than 120 million packages may be delivered in the week before Christmas, up 6 percent from last year, the world’s largest package-delivery company said in a statement.

U.S. consumers poured into the malls and took to the Web during Thanksgiving weekend, spending a record $52.4 billion at a pace that may be hard to sustain as the holiday shopping season gets under way, the National Retail Federation said, citing a survey from BIGresearch.

Coach Inc., the largest U.S. luxury handbag maker, expects an “excellent holiday season,” partly due to shoppers’ “strong interest” in accessories for self-purchase, Chief Executive Officer Lew Frankfort said on a conference call last week.

Holiday Sales

Limited Brands Inc. and Macy’s posted November same-store sales that topped analysts’ estimates as Thanksgiving weekend deals drew record crowds, while chains such as Kohl’s and Target Corp. failed to take advantage of pent-up demand.

Retailers have outperformed the broader market this year. The Standard and Poor’s Supercomposite Retailing Index rose 5 percent through last week while the S&P 500 Index fell 1.1 percent.

Consumer confidence probably picked up this month, the preliminary Thomson Reuters/University of Michigan survey for December may show on Dec. 9. Confidence rose to 65.8 from 64.1 at the end of November, according to economists’ forecasts.

A report the same day from the Commerce Department may show the trade deficit was little changed in October. The gap may come in at $44 billion, up from $43.1 billion in September, according to the median forecast.

Fewer Claims

Jobless claims probably fell to 395,000 last week from 402,000 the prior week, economists forecast the Labor Department will report Dec. 8.

The ISM services survey covers industries ranging from utilities and retailing to health care and finance.

A report by the same group on Dec. 1 showed manufacturing last month expanded at the fastest pace in five month, boosted by gains in orders and production.

The Commerce Department will report today at 10 a.m. that factory orders in October fell 0.3 percent as demand for aircraft waned, according to the median projection in the Bloomberg survey. Bookings climbed 0.3 percent the prior month,

The Federal Reserve last week said the U.S. economy expanded at a “slow to moderate” pace in 11 of its 12 districts in October and the first half of November, led by gains in manufacturing and consumer spending. “Hiring was generally subdued” and residential real estate “generally remained sluggish,” the Fed said. “Consumer spending increased modestly, on balance.”

© Copyright 2023 Bloomberg News. All rights reserved.

Service industries in the U.S. probably expanded in November at the fastest pace in six months, a sign the economy is accelerating in the final months of 2011, economists said before a report tomorrow. The Institute for Supply Management s non-manufacturing index rose to...
Sunday, 04 December 2011 06:07 PM
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