ONE ECONOMY TO RULE THEM ALL:

Factory Orders, Services Lift Outlook (Alister Bull, 8/04/04, Reuters)

Hope for the U.S. expansion got a boost on Wednesday as a batch of buoyant numbers signaled the economy's recent soft spot may prove short-lived and pointed to more interest rate hikes by the Federal Reserve.

The Commerce Department said factory orders advanced 0.7 percent in June, after a revised 0.4 percent gain in May. Economists had expected orders to rise 0.5 percent.

The data were more upbeat than many June numbers and dovetailed with an Institute for Supply Management poll on Monday showing U.S. factories picked up their pace in July.

A separate ISM report on Wednesday showed that strength spilled into the service sector, which accounts for 80 percent of the U.S. economy. The ISM non-manufacturing index rose to 64.8 in July from 59.9 in June. Wall Street had expected a weaker 61.0 reading.

"Both numbers suggest that there's still strength in the economy," said Gary Thayer, chief economist at A.G. Edwards & Sons in St Louis, Missouri.

Other than herd-think there's no reason to believe rates should rise.

Posted by Orrin Judd at August 4, 2004 4:52 PM