U.S. companies in February cut the fewest jobs in two years, according to ADP Employer Services data, while the Institute for Supply Management’s gauge of service industries topped estimates.

The S&P 500 rose for a fourth straight day as Novell Inc. rallied 28 percent on a takeover offer. Pfizer Inc., the world’s biggest drugmaker, was said to bid as much as $4.08 billion for Germany’s Ratiopharm GmbH. United Parcel Service Inc. rallied 1.3 percent after Goldman Sachs Group Inc. advised buying the shares.

Service industries in the U.S. expanded in February at the fastest pace since October 2007, a sign the recovery is broadening.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 53 from 50.5 the prior month. The February figure exceeded the median forecast for a gain to 51, according to a Bloomberg News survey of economists. Readings higher than 50 signal growth.

The factory rebound that helped the economy emerge from the worst recession since the 1930s is starting to generate improvement in other industries, giving a boost to companies such as Macy’s Inc. The group’s measure of employment rose to the highest level since April 2008, signaling the economy may be on the cusp of creating the job growth necessary to encourage spending.

“The strength in the nation’s manufacturing sector is now spreading to the services economy,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “With services activity picking up and manufacturing continuing to show strong gains, the economic outlook looks to be self-sustaining. We are probably just months away from seeing broad-based increases in hiring.”

The index of non-manufacturing exceeded the highest estimate in the Bloomberg survey of 73 economists. Forecasts ranged from 48.5 to 52.9.

Companies cut an estimated 20,000 jobs in February, the smallest drop in two years, after a revised 60,000 reduction a month earlier that was larger than previously estimated, data from ADP Employer Services showed today. The decline in February was the smallest in two years.

Fewer Job-Cut

A separate report from the job placement firm Challenger, Gray & Christmas Inc. showed employers in February announced the fewest job cuts in more than three years. Planned firings fell 77 percent in February from a year earlier, the Chicago-based firm said today.

The non-manufacturing gauge of business activity, a measure of sentiment, increased to 54.8 in February from 52.2 in January. The index of new orders rose to 55 from 54.7, and a gauge of employment increased to 48.6 from 44.6 the prior month.

A measure of prices paid fell to 60.4 from 61.2 and a gauge of backlogs rose to 46 from 45.5.

The Labor Department will issue its February employment data on March 5. Job losses may have accelerated last month, partly reflecting the blizzards on the East Coast and winter storms in the South that closed some businesses and prompted temporary shutdowns of government offices, economists forecast.

February Payrolls

Payrolls fell by 58,000 employees last month after a decline of 20,000 the prior month, according to the survey median.

Airlines are among companies cutting staff. Continental Airlines Inc. last month said it will eliminate 600 additional reservation-agent jobs, about 23 percent of its total, as more travelers book their own flights.

The lack of jobs may be one reason some merchants are forecasting the improvement in sales this year will pale in comparison to the 2009 drop.

Atlanta-based Home Depot, the largest U.S. home-improvement retailer, last month projected comparable-store sales will climb 2.5 percent in 2010 after dropping 6.6 percent last year. Cincinnati-based Macy’s said sales at established stores will grow by as much as 2 percent after slumping 5.3 percent in 2009.

‘Business Feels Better’

“Business feels better, there is no question about it,” Macy’s Chairman and Chief Executive Officer Terry J. Lundgren said on a Feb. 23 conference call. “We still have high unemployment, and I still see tight credit on consumers.”

The ISM services survey includes industries like retailing, utilities, health care, housing, transportation and finance and insurance. The measure has lagged behind the group’s manufacturing gauge, which registered a reading of 56.5 in February, the seventh consecutive month of expansion. Factories account for 12 percent of the economy.

The world’s largest economy will grow 3 percent this year after contracting 2.4 percent in 2009, according to the median estimate of economists surveyed last month. Consumer spending, which accounts for about 70 percent of the economy, is forecast to climb 2 percent this year

Posted by Shayne Heffernan on Mar 3rd, 2010and filed underLatest News, USA.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site