Still only less than a few converts about recovery - are all of these economic reports a flash in the pan? a government conspiracy or illusion? or is there a ray of hope and primary epicenter wave 3 knocking at the door of dawn?
U.S. Economy: February Services Index Highest in 15 Months
from Bloomberg
By Monee Fields-White
Washington, March 5 (Bloomberg) -- The biggest part of the U.S. economy expanded in February at the fastest pace in 15 months, an industry survey showed.
The Institute for Supply Management's index of service companies, builders and other non-manufacturing companies rose more than expected. That adds to reports of factory growth for the first time in 19 months, rising construction and increases in incomes and spending that show the economy is rebounding from the recession that began last March.
``We were looking for a single, but we got a home run,'' said Scott Brown, an economist at Raymond James & Associates in St. Petersburg, Florida. The services index has risen to ``the kind of level that we were seeing a couple of years ago when the economy was booming.''
The institute's index of non-manufacturing business, which accounts for about four-fifths of the U.S. economy, rose to 58.7 from 49.6 in January. A reading above 50 signals expansion and the index hasn't been this high since November 2000. Analysts had expected the it to rise to 51, according to the median of 36 forecasts in a Bloomberg News survey.
Orders at service companies also were the highest in 15 months, reflecting rising sales at retailers such as Costco Wholesale Corp. Demand for goods at the retail level has already started to boost production at manufacturers, which reported expansion in February for the first time since July 2000.
Treasury securities fell after the report added to investor concern that the rebound in growth will lead the Federal Reserve to raise interest rates by midyear.
European Economy
European services, such as retailers, banks and airlines, also are showing a pick up in business. An index of service industries compiled by Reuters for the dozen nations sharing the euro rose to 51.5 last month, the highest since August, from 51 in January.
The Treasury's 4 7/8 percent note maturing in February 2012 fell 1/4 point, pushing up the yield 3 basis points to 5.03 percent. A basis point is 0.01 percentage point.
The U.S. services reading compares with an average of 59.2 for all of 2000, when the economy grew 4.1 percent. In March 2001, the nation slipped into recession, according to the National Bureau of Economic Research, a private, non-profit group that charts the economy.
`Pulling Itself Together'
``The economy is now sort of pulling itself together to come up,'' John Snow, chairman and chief executive of CSX Corp., the third-largest U.S. railroad, said in an interview last week. ``It's no longer fighting a downward momentum.''
The institute, formerly the National Association of Purchasing Management, gathers statistics from more than 370 purchasing executives in more than 62 industries, including law firms, hospitals, government and retailers.
The Tempe, Arizona, group's survey is a companion report to its factory index, which last week showed manufacturing grew in February for the first time in 19 months. The gauge of new orders to manufacturers rose to the highest level since October 1994, and the production index was the highest in two years.
Consumer spending in the fourth quarter grew at a 6 percent annual rate, the fastest pace since the second quarter of 1998, Commerce Department figures showed last month. Spending on services rose at a 1.8 percent annual pace during the fourth quarter, and economy grew at a 1.4 percent pace.
``Amazingly, the consumer is still with us,'' said A.G. Lafley, chief executive officer of Proctor & Gamble Co., in an interview last week.
Orders Rise
As consumers spend more, orders are increasing to factories and service companies.
The new orders index for non-manufacturing companies rose to 57.3 in February, the highest since November 2000, from 49.4 in January. Non-manufacturing inventories increased for the first time since October 2000. Export orders rose for a third straight month, today's report showed.
Costco, the biggest U.S. chain of warehouse clubs, said sales at its stores open a year or more rose 7 percent in its fiscal second quarter, and 8 percent in the four weeks that ended March 3. The company said it sold more electronics, clothing and sporting goods.
The institute's index of prices paid, a measure of costs for purchased materials and services, rose to 50 from 49. Costs increased for construction, health services and real estate.
Employment
The employment index contracted in February at a faster pace than a month earlier, suggesting service companies haven't seen enough business to start hiring more workers.
``Businesses are still wary of the sustainability and vigor of the expansion,'' said Steven Wood, chief economist at FinancialOxygen Inc. in Walnut Creek, California.
Still, a separate report showed the number of job cuts planned by U.S. employers dropped in February to the lowest level in eight months. Businesses announced plans to eliminate 128,155 positions, down 40 percent from a month earlier, according to the job-placement firm Challenger, Gray & Christmas Inc. The decrease was the fourth in the past five months.
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