Growth in Services Probably Picked Up: U.S. Economy Preview

Bloomberg, (5/8) -- Growth in U.S. service industries probably picked up in July, indicating the biggest part of the economy is benefiting from gains in hiring and a rebound in the housing industry.The Institute for Supply Management’s non-manufacturing index will rise to 53.1 from June’s 52.2, the lowest level since February 2010, according to the median forecast of 60 economists surveyed by Bloomberg before figures tomorrow.Readings above 50 signal growth in the Tempe, Arizona-based group’s report. Other data may show the trade deficit narrowed in June.Gradual gains in the job market are supporting household purchases of services as the effects of across-the-board federal budget cuts and higher taxes begin to wane. A pickup in consumer spending, helped by rising home values and stock prices, is needed to combat softer overseas markets and bolster economic growth into the second half of the year.The ISM index, which covers almost 90 percent of the economy, includes industries ranging from utilities and retailing to health care, housing and communications. It follows the group’s report on manufacturing, which last week showed the fastest pace of factory expansion in more than two years.