Under the headline “Economic Data Indicate Strength,” the Wall Street Journal (2/4, Sparshott, Leo, subscription required) reports that service sector growth is rising at a sharp pace, mirroring the performance of the manufacturing sector, while productivity is also on the rise. That may change, and “there is a good chance that productivity will slow further this year, as firms are increasingly forced to hire more workers to expand output,” one economist said. But overall, the predominance of indicators are pointing to stronger economic momentum for 2011.
The AP (2/4) concentrates its reporting on “the US service sector, which employs nearly 90 percent of the work force.” The sector’s increases bode well for the job market. The index from the Institute for Supply Management “rose to 54.5, the highest since May 2006. The employment indexes in the manufacturing and service sector indexes both rose in January, a positive sign that the economy may soon generate more jobs.” And, “the report’s index of new orders jumped to 64.9 last month, the highest in seven years. That’s a sign that services firms will keep growing.”
Under the headline “Data Points To Stronger Growth Momentum,” Reuters (2/4) quotes Robert Dye of PNC Financial Services, who said, “Momentum from the end of 2010 is carrying over. It will be another year of recovery and repair.”
Despite Snow, Retailers See Strong January Sales. The New York Times (2/4, B3, Hauser) reports, “Retailers kicked off 2011 with better-than-expected sales in January, with some relying on discounts to clear merchandise left over from the holiday season.” Overall, “same-store sales rose 4.2 percent in January compared with a 3.3 percent increase in the month a year ago and forecasts of 2.7 percent,” and these gains “followed a holiday shopping season that was the strongest since 2006.” However, “some analysts said that January in general was not considered a good bellwether month for the rest of the year.” And “while the results exceeded forecasts, analysts said there were challenges ahead as rising costs pare profits.”
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