The reports on the service sector and home sales contracts helped spark optimism on Wall Street. The Dow Jones industrial average gained 46 points for the day, and a rally since mid-February has the index closing in on 11,000.
The big question is whether the latest encouraging signs will help embolden companies to hire at a faster pace and bring down the unemployment rate.
Some economists and corporate executives say it could. And they say they no longer fear a double-dip recession in which the end of government stimulus money would tip the economy back into contraction.
Factories are producing more. Americans are willing to spend more. And the economy added 162,000 jobs last month, the most in nearly three years.
"It's much better news than we would have thought a few months ago," said Jennifer Lee, an economist at BMO Capital Markets.
The Institute for Supply Management, a trade group, said its service index rose to 55.4 in March from 53 in February. Any reading above 50 signals expansion. It was the strongest growth since ISM revised how it measured the service sector in January 2008.
The service sector is critically important because it accounts for about 80 percent of U.S. jobs, excluding farm workers. It includes jobs in areas like health care, retail and financial services.
Offering more optimism, the National Association of Realtors said the number of people who agreed to buy previously occupied homes rose 8.2 percent in February. The index is considered a signal of future sales activity.
Home sales had been sluggish during the winter, partly because shoppers felt less rushed after lawmakers extended the deadline to qualify for a tax credit. The new deadline is April 30.More interest in hiring
Both reports suggest the broader economy is recovering, and employers are taking notice.(2 of 2)
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