Service sector growth and hopes associated with it

Service sector growthThe ADP National Employment Report released in March showed the private sector growth was on the rise. The private sector added 209,000 positions last month which was slightly above the economists expectations of a 200,000 gain in jobs. ADP also revised the job gains seen in January and February to 182,000 and 230,000 respectively. This report is jointly developed with Macroeconomic Advisers LLC.

The analysts said that it would not change their forecasts for the governments more comprehensive labor market report due on Friday that includes public and private sector employment. Data from other sources revealed that the U.S service sector also showed signs of growth in the last month though the pace of overall growth slowed which the analysts say was expected as the index ran up to a year high in February. Anthony Chan, chief economist, JPMorgan Private Wealth Management said “the positive effects seen at the beginning of the year are starting to wear off but the easing in activity is not as bad as some had feared and overall the data tells us that the recovery continues uninterrupted”. These reports were overshadowed on Wall Street as investors were disappointed by the Federal Reserve’s decision to back away from the idea of launching a third round of monetary action as there was a gradual improvement in the recovery, minutes from the U.S central banks last meeting on Tuesday showed. This caused the U.S stocks to go down more than 1% in afternoon trading. The federal reserves assessment remained cautious while the economists expect a slow growth in the first quarter compared to 3% annualized rate seen in the last months of the previous year.

The unemployment rate is steady at a three year low of 8.3%. The nonfarm payroll report of the U.S Labor Department is expected to show a net gain of 203,000 jobs including a rise in private payrolls to 218,000 in the last month.  The economists refer the ADP report to fine-tune their expectations of the Labor Department’s report. Though the two sets of data are not always correlated, the difference between the figures over the last 12 months was 1000, according to Credit Suisse. The service sector accounts for two-thirds of the U.S economy, the employment index improved from 55.7 to 56.7 while the measure of prices fell63.9 from68.4. The institute of supply management’s services index fell to 56.0 from 57.3 slightly less than the economist’s forecast of 57.0. There’s hope for the housing market as there was a gain in applications for mortgages while home prices rose. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 4.8 percent in the week ended March 30.

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