With more jobs, US recovery takes hold

WASHINGTON: Service industries in the US expanded for a fifth month and factory orders rose, pointing to a broadening economic recovery that’s generating more jobs. The Institute for Supply Management’s index of non- manufacturing businesses, which makes up almost 90% of the economy, held at 55.4 for a third month in May. Readings above 50 signal expansion. Bookings at factories rose 1.2% in April, a Commerce Department report showed.

Companies from Target to Deere are seeing a pickup in sales that indicates confidence is growing even as the European debt crisis roils financial markets. A government report tomorrow is likely to show employers added more than 500,000 jobs last month, leading to gains in incomes and spending that will help sustain the economic rebound as government support wanes. “Finally we’re getting signals that job growth is picking up,” said Jonathan Basile, an economist at Credit Suisse in New York.

“If we’re getting job growth it suggests further recovery in confidence and the likelihood that consumer spending continues to expand at a reasonable pace.”

Economists forecast the index would rise to 55.6, according to the median of 76 projections in a news survey. Estimates ranged from 53.9 to 57. The measure averaged 55.3 during the expansion that spanned from November 2001 to December 2007.

The number of Americans filing first-time claims for jobless benefits last week fell to 453,000, a level that signals firings remain elevated even as employment grows, according to figures from the Labour Department. Data from ADP Employer Services showed companies added 55,000 workers to payrolls in May, the fourth consecutive increase.



Stocks were little changed and treasury securities dropped following the reports. The Standard & Poor’s 500 Index rose 0.2% to 1,100.32 at 11:53 am in New York. The yield on the benchmark 10-year note increased to 3.37% from 3.34% late Wednesday.

The ISM non-manufacturing employment gauge climbed to 50.4 in May, the highest level since December 2007. The measure of new orders cooled, while a gauge of business activity climbed to the highest level in four years. Categories in ISM services survey include utilities, healthcare, housing, transportation and finance and insurance. Private employment has grown by 483,000 workers in the first four months of the year, according to figures from the Labor Department.

Wages and salaries advanced 1.4% over the period, the best four-month gain in two years. Payrolls climbed by 523,000 in May, the fifth straight month of gains.