More great news on the economy.
NEW YORK, May 3 (Reuters) – Activity in both the vast US services sector and at factories accelerated more than expected, according to data that pointed to fresh economic vigour and the risk of more interest rate hikes.
Most economists are expecting economic growth to slow from a torrid first-quarter pace of 4.8 per cent, yet the latest figures showed no hints of slowing and appeared likely to keep the Federal Reserve leaning toward further rate rises. Fed Chairman Ben Bernanke said last week a pause in the rate-hike cycle was possible.
The Institute for Supply Management’s services index rose to 63.0 in April from 60.5 in March, with new orders hitting a two-year high, confounding Wall Street estimates for a slowdown to 59.2.
In addition, the government reported new factory orders rose a stronger-than-expected 4.2 per cent in March, beating estimates for a 3.5 per cent gain, as demand for transportation equipment, computers and electronics proved robust.
Treasury debt prices fell and the dollar firmed against the euro after the data.
“It does suggest that the overall economy is improving and for the market it is part of the recent theme – all the numbers are coming in on the stronger side of expectations,” said Scott Brown, chief economist at Raymond James & Associates in St Petersburg, Florida.
Usually high oil and gas prices really hurt the economy, but ours keeps going strong. Just imagine how hot the economy would be if If oil prices were around $40 a barrel instead of hovering around $70. Actually, I read that they have dropped below $70 a barrel.
Watch for Mahmoud Ahmadinejad to come out with another threat against Israel and the US. At some point, I would think that oil speculators would become bored with Ahmadinejad’s games and begin to ignore him.