Steady growth in Beige Book fails to inspire

Julian Harris
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AMERICA’S economy is growing at a “modest to moderate pace”, the Federal Reserve’s latest Beige Book said last night, while a separate survey showed the US service sector expanding at a steady rate.

The Beige Book, which summarises economic developments in 12 US districts, reported “strong economic growth” in Dallas but less inspiring progress elsewhere in the country.

Earlier in the day the Institute for Supply Management’s (ISM) latest non-manufacturing survey had come in at 53.7 for May, above April’s score of 53.1. The closely-watched reading has been over 50 for 41 straight months, pointing to ongoing expansion in the sector.

Yet neither the Beige Book nor the ISM survey were much consolation to investors, as the Dow Jones ended down 1.43 per cent.

ISM’s sub-index for employment is now at just 50.1, suggesting that the service sector is adding very few new jobs. A separate jobs report from ADP said that private firms added 135,000 jobs in May, below analysts’ expectations. This Friday’s official non-farms payroll data will carry significantly more weight with investors, however.

Additionally, data from MBA yesterday said that US mortgage applications are down, as rates rise.