Economy on solid ground despite cooler hiring
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. companies hired far fewer workers than expected in May, but an acceleration in services sector growth supported views the economy was regaining strength after sagging early this year.
While other data on Wednesday suggested a widening trade gap could weigh on growth in the second quarter, a jump in imports pointed to a welcome pick-up in domestic demand.
"May job growth may have been a little less than expected but with imports rising, it looks like the economy is moving forward solidly," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
Private employers added 179,000 jobs to their payrolls last month after hiring 215,000 workers in April, according to payrolls processor ADP.
Economists had expected a gain of 210,000 private sector jobs in May. Nevertheless, many analysts said the report did not change their expectations for the government's more comprehensive jobs data due on Friday.
Separately, the Institute for Supply Management said its services sector index rose to 56.3 last month from 55.2 in April as new orders, order backlogs and hiring increased. It was the highest reading in nine months.
Following on the heels of data on Tuesday that showed robust growth in factory activity in May, it underscored the economy's strengthening fundamentals. Any reading above 50 indicates an expansion.
The firming economic tone was highlighted by the Federal Reserve's anecdotal Beige Book. Reports from the central bank's contacts indicated activity expanded in recent weeks. Continued...