As the U.S. shows signs of picking up, Europe’s economy is emerging from a recession. German factory orders rose 2% in July from a year ago, the Economy Ministry in Berlin said today. Bookings dropped from the previous month, when demand was boosted by the Paris Air Show.
Estimates of the 78 economists in the Bloomberg survey for the ISM services figure ranged from 53.5 to 57.5, which includes industries from utilities and retail to health care, housing and finance. Readings above 50 indicate growth in the industries that make up almost 90% of the economy.
The group’s measure of new orders increased to 60.5 in August from 57.7 the month earlier. A gauge of employment in non-manufacturing industries advanced in August to a six-month high.
Data tomorrow from the Labor Department may show employers stepped up the pace of hiring in August, taking on 180,000 workers after adding 162,000 a month earlier, according to the median forecast in a Bloomberg survey.
Among non-manufacturing industries in the U.S., home- improvement retailers are enjoying increased sales as the housing market rebounds. Robert Niblock, chief executive officer of Mooresville, North Carolina-based Lowe’s Cos., said the market’s growth depends on how much higher mortgage rates affect Americans’ buying decisions.
The average rate on a 30-year fixed mortgage climbed to a two-year high of 4.58% on Aug. 22 after reaching a recent low in May of 3.35%, data from Freddie Mac show.
“The stronger-than-expected pace of home-improvement industry growth so far this year was fed by modestly stronger gains in housing turnover and job growth than originally forecast,” Niblock said on an Aug. 21 conference call.
Higher mortgage rates, ‘shouldn’t derail it as long as job gains persist, homes continue to appreciate, and rates rise more gradually going forward,” he said.
Job gains and cheaper financing by some automakers are helping car dealers stay busy. Cars and light trucks sold last month at a 16 million annualized rate, the fastest since October 2007, according to Ward’s Automotive Group data.
General Motors Co. recorded its best month since 2008 and Ford Motor Co. its strongest month of retail sales since 2006. Chrysler Group LLC sales rose for the 41st straight month.
Americans spending more on cars and housing helped the economy maintain a “modest to moderate” pace of expansion from early July through late August, even as borrowing costs increased, the Fed said yesterday.
“Consumer spending rose in most districts, reflecting, in part, strong demand for automobiles and housing-related goods,” the Fed said. “Residential real estate activity increased moderately in most districts, and demand for nonresidential real estate gained overall.”