Service Industries in U.S. Probably Little Changed in September
Service industries in the U.S. probably expanded in September at about the same pace as in the prior month, indicating the biggest part of the economy is making scant progress, economists said before a report today.
The Institute for Supply Management’s non-manufacturing index, which covers almost 90 percent of the economy, fell to 53.4 last month from 53.7 in August, according to the median forecast of 77 economists in a Bloomberg survey. Readings higher than 50 signal growth. Another report may show employers added fewer workers.
Service providers such as FedEx Corp. (FDX) are cutting growth forecasts as the global economy weakens and American companies curb investments in new equipment. At the same time, a recovery in housing is benefiting builders like Lennar Corp. (LEN) and helping sustain the U.S. expansion.
“The services industries in the U.S. are in kind of a steady state,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.
The Tempe, Arizona-based ISM’s index, which covers industries ranging from utilities and retailing to health care, housing and finance, is due at 10 a.m. Bloomberg survey estimates ranged from 51.5 to 54.7.
The group’s manufacturing index, released Oct. 1, unexpectedly expanded in September after three months of contraction, the longest such stretch since the recession ended in June 2009.
Homebuilding may be among the best performers. New housing construction climbed in August, boosted by the strongest pace of single-family starts in more than two years, Commerce Department figures showed last month.
Borrowing Costs
Mortgage rates at all-time lows and cheaper properties are driving sales for companies like Lennar. The third-largest builder by revenue said on Sept. 24 that its quarterly profit more than quadrupled from a year earlier.
“The homebuilding business is beginning to revert to normal and that’s positive for the U.S. economy in general, which is in turn good for a sustained recovery in the housing market,” Stuart Miller, chief executive officer at Lennar, said on a conference call. “Overall demand has been improving and we’ve seen a consistent sales pace at improving prices.”
Investors have taken notice. The Standard & Poor’s Supercomposite Homebuilder Index has climbed 74 percent this year, outpacing a 15 percent gain for the broader S&P 500 Index.
Delivery Service
For FedEx, operator of the world’s largest cargo airline, weaker global growth is taking a toll. On Sept. 18 the economic bellwether, because it ships goods from financial documents to electronics, pared its forecast for 2012 U.S. growth to 1.9 percent from a June projection of 2.4 percent. The global expansion will cool to 2.3 percent this year, followed by a 2.7 percent gain in 2013, the Memphis-based company said.
Unemployment stuck above 8 percent for more than three years and limited job growth are also a drag for the services industry. Figures at 8:15 a.m. today from the ADP Employer Services may show private employers hired 140,000 workers in September after 201,000 the prior month, according to the median estimate in a Bloomberg survey.
Bloomberg Survey
============================================
ADP ISM Non-
Payroll Manu
,000’s Index
============================================
Date of Release 10/03 10/03
Observation Period Sept. Sept.
-------------------------------------------
Median 140 53.4
Average 140 53.3
High Forecast 190 54.7
Low Forecast 90 51.5
Number of Participants 38 77
Previous 201 53.7
-------------------------------------------
4CAST 150 53.0
ABN Amro 130 53.5
Action Economics 140 53.5
Ameriprise Financial 125 53.0
Banca Aletti --- 53.2
Bank of the West 130 53.4
Bank of Tokyo-Mitsubishi --- 54.0
Banorte-IXE --- 53.0
Bantleon Bank AG --- 53.5
Barclays --- 53.0
Bayerische Landesbank 125 53.6
BBVA 100 52.7
BMO Capital Markets 120 53.5
BNP Paribas 150 52.0
BofA Merrill Lynch 150 54.0
Briefing.com 100 52.0
Capital Economics --- 53.0
CIBC World Markets --- 52.9
Citi --- 52.0
ClearView Economics --- 53.2
Comerica --- 53.0
Commerzbank AG 150 54.0
Credit Agricole CIB --- 53.5
Credit Suisse --- 53.0
Daiwa Securities America --- 53.0
Danske Bank --- 53.5
DekaBank --- 53.0
Desjardins Group --- 53.0
Deutsche Bank Securities 135 54.0
Deutsche Postbank AG --- 54.5
DZ Bank 145 53.1
Exane --- 53.2
First Trust Advisors --- 54.1
FTN Financial --- 53.0
Goldman, Sachs & Co. --- 54.0
Helaba --- 53.5
High Frequency Economics 140 54.2
HSBC Markets 155 53.5
Hugh Johnson Advisors 133 52.8
IDEAglobal 150 54.0
IHS Global Insight --- 54.3
Informa Global Markets 150 51.5
ING Financial Markets 150 53.6
Insight Economics 140 53.0
Intesa Sanpaulo --- 53.5
ITG Investment Research --- 51.5
J.P. Morgan Chase --- 53.5
Janney Montgomery Scott 135 53.2
Jefferies & Co. --- 53.0
John Hancock Financial 178 ---
Landesbank Berlin --- 53.5
Landesbank BW 90 54.0
Lloyds Bank 150 53.4
Maria Fiorini Ramirez --- 53.5
Moody’s Analytics 175 53.4
National Bank Financial --- 53.5
Natixis 160 53.0
Nomura Securities 165 52.6
Nord/LB --- 54.0
OSK Group/DMG --- 53.3
Pierpont Securities --- 52.5
PineBridge Investments --- 53.0
PNC Bank --- 53.2
Prestige Economics --- 53.9
Raiffeisenbank International 160 ---
Raymond James 130 53.2
RBC Capital Markets --- 52.5
RBS Securities --- 53.0
Renaissance Macro Research 135 53.0
Scotiabank 110 53.5
Societe Generale 125 54.7
Standard Chartered 170 54.0
Stone & McCarthy --- 53.5
TD Securities 150 53.0
UBS --- 53.7
University of Maryland 135 53.5
Wells Fargo & Co. --- 53.7
Westpac Banking Co. 90 52.0
Wrightson ICAP 190 54.0
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To contact the reporter on this story: Michelle Jamrisko in Washington at mjamrisko@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Service Industries in U.S. Probably Little Changed in September
JB Reed/Bloomberg News
An employee prepares to load packages onto a delivery truck at the FedEx Harlem River Yards sorting facility in New York.
An employee prepares to load packages onto a delivery truck at the FedEx Harlem River Yards sorting facility in New York. Photographer: JB Reed/Bloomberg News
Oct. 2 (Bloomberg) -- Larry Kantor, head of research at Barclays Capital, talks about central bank monetary policy and the outlook for the financial markets. Kantor speaks with Tom Keene and Scarlet Fu on Bloomberg Television's "Surveillance." (Source: Bloomberg)
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