Ser­vices firms log July sag in growth

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - In­for­ma­tion for this ar­ti­cle was con­trib­uted by Paul Wise­man and Josh Boak of The As­so­ci­ated Press.

WASH­ING­TON — U.S. ser­vices firms grew last month at the slow­est pace since Au­gust 2016, a per­for­mance con­sis­tent with only mod­est eco­nomic growth.

The In­sti­tute for Sup­ply Man­age­ment said Thurs­day that its ser­vices in­dex slipped in July to 53.9 from June’s 57.4. It was the low­est read­ing since the in­dex reg­is­tered 51.7 in Au­gust 2016. Still, any­thing above 50 sig­nals growth, and Amer­i­can ser­vices com­pa­nies are on a 91-month win­ning streak.

Pro­duc­tion, new or­ders, hir­ing and ex­port or­ders all grew more slowly in July.

The in­dex came in lower than econ­o­mists had ex­pected and be­low the 55.9 av­er­age over the past 12 months. An­thony Nieves, chair of the in­sti­tute’s ser­vices sur­vey com­mit­tee, said the July read­ing is con­sis­tent with over­all U.S. eco­nomic growth of 1.9 per­cent a year, a medi­ocre pace and about what the econ­omy has av­er­aged so far this year. Growth picked up to a 2.6 per­cent an­nual pace from April through June af­ter get­ting off to a slow 1.2 per­cent start the first three months of 2017.

Still, Nieves said he sus-

● pects that the slow­down just re­flects the sum­mer dol­drums. He noted that re­spon­dents to the sur­vey “project that things will pick up go­ing into the fall.”

Ser­vices are an im­por­tant com­po­nent of the U.S. econ­omy. Pri­vate-sec­tor ser­vice work­ers — from cashiers to stock bro­kers to nurses — hold more than 70 per­cent of Amer­i­can jobs.

Con­sumer spend­ing on ser­vices, which ac­counts for nearly half of U.S. eco­nomic ac­tiv­ity, rose at a 1.9 per­cent an­nual pace from April through June, the slow­est pace since the first quar­ter of 2016, the Com­merce Depart­ment re­ported re­cently.

Or­ders at U.S. fac­to­ries in­creased in June as de­mand surged for air­craft.

The Com­merce Depart­ment said Thurs­day that fac­tory or­ders in­creased 3 per­cent in June, a solid re­bound af­ter de­clin­ing in May and April. But the gains largely came from a 131 per­cent jump in or­ders for civil­ian air­craft, a volatile cat­e­gory.

U.S. man­u­fac­tur­ing has been re­cov­er­ing from a slow­down in late 2015 caused by lower en­ergy prices and a strong dol­lar that made Amer­i­can prod­ucts more ex­pen­sive over­seas. Fac­to­ries have re­sponded with a rel­a­tively slight up­turn in hir­ing. Man­u­fac­tur­ers added a mod­est av­er­age of 8,833 jobs dur­ing the first six months of this year.

Ex­clud­ing the trans­porta­tion sec­tor that in­cludes air­craft, fac­tory or­ders slipped 0.2 per­cent in June.

De­mand fell for com­put­ers and elec­tronic prod­ucts, while pri­mary met­als, ma­chin­ery and mo­tor ve­hi­cles eked out gains.

Other man­u­fac­tur­ing in­di­ca­tors point to con­tin­ued but cau­tious growth.

The In­sti­tute for Sup­ply Man­age­ment said Tues­day that its in­dex of fac­tory ac­tiv­ity fell 1.5 points to 56.3 in July. Still, any read­ing above 50 sig­nals that man­u­fac­tur­ers are ex­pand­ing.

Separately, the Fed­eral Re­serve said that fac­tory pro­duc­tion ad­vanced 0.2 per­cent in June and 1.2 per­cent over the 12 months from June 2016.

Fewer Amer­i­cans ap­plied for unem­ploy­ment aid last week, keep­ing the num­ber of peo­ple seek­ing ben­e­fits close to his­toric lows.

Weekly unem­ploy­ment ap­pli­ca­tions fell by 5,000 to

240,000, the La­bor Depart­ment said Thurs­day. The less volatile four-week av­er­age de­clined 2,500 to 241,750. The num­ber of peo­ple col­lect­ing unem­ploy­ment ben­e­fits has fallen 8.6 per­cent over the past 12 months to about 2 mil­lion.

The job mar­ket ap­pears solid as the U.S. en­ters its ninth year of re­cov­ery from re­ces­sion. Em­ploy­ers are hold­ing on to work­ers with the ex­pec­ta­tion that busi­ness will con­tinue to im­prove. Job­less­ness claims — a close in­di­ca­tion of lay­offs — have come in be­low 300,000 for 126 weeks in a row. That’s the long­est such stretch since 1970, when the U.S. pop­u­la­tion was much smaller.

The unem­ploy­ment rate has fallen to a healthy 4.4 per­cent. Econ­o­mists ex­pect the govern­ment’s re­port for July, to be is­sued to­day, to show that U.S. em­ploy­ers added 180,000 jobs.

The Fed­eral Re­serve said last week that it’s keep­ing its key in­ter­est rate un­changed at a time when in­fla­tion re­mains un­de­sir­ably low de­spite the job mar­ket con­tin­u­ing to strengthen.

AP/ELISE AMENDOLA

A restau­rant in Mid­dle­ton, Mass., ad­ver­tises for help last month. Peo­ple ap­ply­ing for unem­ploy­ment ben­e­fits fell last week.

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