The US economic data continue to beat expectations. After Tuesday's better-than-expected report on factory orders, yesterday provided better-than-expected ISM non-manufacturing data and an improvement in the employment picture. From Bloomberg:
Growth in U.S. services industries slowed less than economists forecast in May as a jump in new orders offset a decline in employment.
The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 51.7 from 52 in April; readings above 50 indicate expansion. The Labor Department said separately that worker productivity in the first quarter accelerated more than previously estimated as companies cut jobs without losing output.
A private survey today indicated companies unexpectedly added 40,000 jobs in May, after a gain of 13,000 the prior month...
There was also better-than-expected data from Japan yesterday. From Bloomberg:
Japanese businesses cut investment less than economists predicted last quarter, signaling that the world's second-largest economy may avoid a recession.
Capital spending excluding software fell 5.3 percent in the three months ended March 31 from a year earlier, the Finance Ministry said today in Tokyo. The median estimate of six economists surveyed by Bloomberg News was for a 7.3 percent drop.
The reports from the euro area have been mixed though. There was an upward revision to first quarter GDP growth from 0.7 percent to 0.8 percent but services turned out weak in May, the Royal Bank of Scotland Group Plc's services index falling to 50.6 from 52 in April. Weak retail sales, as reported by Bloomberg yesterday, certainly won't help the eurozone economy.
European retail sales declined 2.9 percent in April, more than three times as much as economists forecast, as soaring fuel and food prices undermined consumer spending.
The annual drop in euro-area retail sales is the largest since the European Union's statistics office in Luxembourg started collecting the data in 1995. Sales fell 0.6 percent from the prior month, according to today's report. Economists had expected a 0.8 percent annual decline and a monthly gain of 0.2 percent, according to Bloomberg News surveys...
The EU statistics office revised the annual decline in March retail sales, which are inflation-adjusted and exclude automobiles, to 2.3 percent from an initially reported 1.6 percent. The monthly drop was revised to 0.9 percent from 0.4 percent.
Meanwhile, the flow of data coming out of the UK has been consistently negative. On Tuesday, Reuters reported that construction activity dropped last month.
The Chartered Institute of Purchasing and Supply's construction PMI fell to 43.9 in May from 46.1 in April. That was the third consecutive month of decline and weakest reading since the survey began in 1997...
Yesterday, Bloomberg brought more bad news for the UK economy.
U.K. services from banks to airlines unexpectedly contracted for the first time in five years and consumer confidence fell to the lowest level since at least 2004, as the economy edged closer to a recession.
An index based on replies from about 700 service companies fell to 49.8 in May, the Chartered Institute of Purchasing and Supply said today in London. A reading below 50 shows contraction. Nationwide Building Society's consumer sentiment index dropped 1 point to 69, the lowest since the survey began in May 2004.
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