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Economic data released Wednesday pointed to the US economy improving at a slightly slower pace than expected.
US Economic activity in the services/non-manufacturing sector grew in January, American purchasing and supply executives said in the latest Non-Manufacturing ISM Report On Business.
Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee; and senior vice president — supply management for Hilton Worldwide said today: "The NMI (Non-Manufacturing Index) registered 50.5% in January, 0.7% higher than the seasonally adjusted 49.8% registered in December, indicating growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index decreased 1 % to 52.2 %, reflecting growth for the second consecutive month. The New Orders Index increased 2.7% to 54.7 %, and the Employment Index increased 1% to 44.6 %. The Prices Index increased 1.6% to 61.2 % in January, indicating an increase in prices paid from December. According to the NMI, four non-manufacturing industries reported growth in January. Respondents' comments overall are cautiously optimistic about business conditions."
Industry Performance (Based on the NMI): The four industries reporting growth in January based on the NMI composite index are: Other Services; Utilities; Information; and Wholesale Trade. The 11 industries reporting contraction in January — listed in order — are: Arts, Entertainment & Recreation; Mining; Retail Trade; Transportation & Warehousing; Management of Companies & Support Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Finance & Insurance; Educational Services; Public Administration; and Accommodation & Food Services.
Business Activity:ISM's Non-Manufacturing Business Activity Index in January registered 52.2 %, a decrease of 1 % when compared to the seasonally adjusted 53.2 % registered in December. Four industries reported increased business activity, and 10 industries reported decreased activity for the month of January. Four industries reported no change from December. Comments from respondents include: "Several key customers have ceased operations" and "Seeing an increase in our business; our customers are feeling more optimistic."
The service index had been expected to rise to at least 51.0 after the ISM on Monday reported that manufacturing had surged to 58.4% in January, the best reading since August 2004.
Services account for about 70% of US economic output.
In a separate report, payroll processor ADP (Automatic Data Processing) and consultancy Macroeconomic Advisers reported private-sector jobs in the US fell by 22,000 in January, the smallest decline since February 2008 . The ADP report precedes Friday's Department of Labor nonfarm payroll data.
The ADP is not a consistent indicator of government data.
Tighter spending controls are needed if the UK government is to halve the deficit over the next 4 years. Unemployment is likely to peak in the third quarter of 2011, the National Institute of Economic and Social Research reported. Dawn Holland from NIESR told CNBC weak growth for the UK economy is expected this year and into 2011:
UK economy
The UK economy which crawled out of recession in Q4 2009 with GDP growth of 01%, will grow at a moderate rate this year, a leading think-tank forecast today.
The latest forecast compared with NIESR's previous growth predictions of 1.3% and 1.5% respectively.
"Despite the disappointingly slow start to the recovery in the fourth quarter of 2009, we are expecting the economy to grow rather faster in the first three months of 2010 and beyond," NIESR said in the report.
Are we on the road to a jobless US recovery? Michelle Girard, of RBS, and James Shugg, of Westpac Institution Bank, discuss the issue with the CNBC news team?
US
In New York, the Dow is down 25 points or 0.24% to 10,272.
The S&P 500 has fallen 0.45% and the Nasdaq has dipped 0.07%.
Pfizer fell 2.7% after the drug giant said its fourth-quarter profit grew to $767 million - - nearly triple the $266 million the world's biggest drugmaker earned a year earlier, when results were hurt by a $2.3 billion charge to settle federal allegations Pfizer improperly marketed some of its drugs. That profit is equal to earnings per share of 10 cents, or 49 cents after excluding one-time items., but was less than analyst estimates.
Earnings growth was mainly due to cost-cutting.
A 34% jump in revenue related to the acquisition of rival Wyeth.
Eurozone retail sales came in flat for December compared to the same time a year earlier. Andy Hartwill from Quasar told CNBC that consumers are trying to increase their savings in the face of rising unemployment:
In Europe, the Dow Jones Stoxx 600 has dipped 0.57% Wednesday.
On the New York Mercantile Exchange, oil for March 2010 delivery is trading at $77.67 up 44 cents from Tuesday's close. In London, Brent crude for March delivery is trading at $76.65 a barrel.
Currencies
The euro is trading at $1.3918 and at £0.8736.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
