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Growth outlook modest to moderate



The latest edition of the Fed's "Beige Book" characterizes economic growth as "modest to moderate," and the ISM's May survey of the service sector says essentially the same thing. No sign of any pickup in growth, and no sign of any deterioration. Just more of the same: modest to moderate growth, which remains disappointing because it's not enough to significantly reduce the economy's idle capacity or the unemployment rate.


The survey of business activity improved marginally in May, but was otherwise unremarkable. Since the service sector is far more important than the manufacturing sector, this partially offsets the weaker trend in the manufacturing sector.


The prices paid index was neutral, just as it was for the manufacturing sector.


The employment index also was neutral, just as it was for the manufacturing sector. This reflects a lack of business confidence in the future, and portends more of the same kind of growth we've seen to date: modest to moderate.


Conditions in the U.S. service sector are "OK," while the Eurozone continues to struggle with contractionary influences.

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