Economic data from the US and eurozone point to higher interest rates

It looks like those waiting for a pause from the Federal Reserve may have to be patient. From Reuters:

In a sign of strong manufacturing and business spending, factory orders climbed 0.7 percent in May despite a drop in orders for transportation equipment, Commerce Department data showed...

Excluding transportation, orders advanced 1.2 percent in May. Factory orders were also higher when defense equipment was stripped out, growing 0.8 percent in the month...

Orders for durable goods, expensive items meant to last three years or more, slipped 0.2 percent, an improvement from the originally reported 0.3 percent decline...

Another report showed U.S. private sector employers created an estimated 368,000 jobs in June, compared with 122,000 jobs in the previous month...

Meanwhile, U.S. chain store sales slipped in the latest week as slowing customer traffic and flooding in the U.S. Northeast crimped activity, according to one report.

And corporate earnings growth continues to look strong.

For the second quarter, earnings are now expected to rise 9.7 percent, up slightly from estimates a week ago of a 9.5 percent increase, Reuters Estimates said.

But it said the growth number should reach 12 percent once all companies have reported, which would mark the 16th straight quarter of double-digit gains for S&P 500 companies.

Data on the eurozone economy are also pointing towards higher interest rates. Bloomberg reports:

European service industries expanded the most in six years in June, adding to evidence that the region's economy would be able to withstand higher interest rates.

An index based on a survey of 2,000 purchasing managers at service companies such as banks and airlines in the 12 nations sharing the euro jumped to 60.7 from 58.7 in May, a report by NTC Economics Ltd. for Royal Bank of Scotland Plc showed. A reading above 50 indicates expansion...

An increased willingness among consumers to buy is giving companies more room to raise prices. Producer-price inflation accelerated to 6 percent in May, the fastest in more than five years, Eurostat, the European Union's statistics office in Luxembourg, said yesterday.

But eurozone retail sales fell unexpectedly in May. From AFX/Forbes:

Retail sales fell 0.6 pct from April and were up 0.8 pct year-on-year, EU statistics office Eurostat said...

The May decline was largely the result of a sharp drop in German retail sales, which fell 2.2 pct month-on-month...

The UK economy, meanwhile, continues to muddle along. Yesterday, the British Retail Consortium reported that shop prices edged up just 0.01 percent in June, while Reuters reported that the UK services sector slowed, the Chartered Institute of Purchasing and Supply/RBS business activity index easing to 58.7 in June from 59.2 in May.

We may get a better idea on the outlook for eurozone and UK interest rates later today when the ECB and BoE announce their interest rate decisions.