US economy shows modest growth as services and jobs stay slightly positive

Tim Wallace
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THE US economy has so far managed to avoid the recessionary downturn the Eurozone risks entering, with positive service sector, employment and productivity figures out yesterday.

Non-manufacturing purchasing managers’ index (PMI) data from the Institute for Supply Management (ISM) came in at 52.9, barely down on September’s 53, demonstrating growth consistent with a modest economic expansion. Any PMI figure above 50 indicates growth.

The ISM’s employment index increased sharply, rising from a contractionary 48.7 to a positive 53.3.

Such employment growth was backed up by the initial jobless figures, which fell to 397,000 last week. The number is down 9,000 from 406,000 in the previous week.

Productivity, too, expanded by 3.1 per cent on last year, the fastest growth since the start of 2010.

A combination of improving productivity and slowing labour costs – down to 1.2 per cent annual growth, from 1.8 per cent in the second quarter – point to a decline in inflation into 2012, analysts said.

“Employment figures are slightly positive,” IHS Global Insight’s Nariman Behravesh told City A.M. “Productivity and PMI figures are consistent with an economy that is not in recession, but is just staggering along. We are confident the US will avoid a recession, as long as nothing really terrible happens in the Eurozone.”