Service Sector Expansion Hits Record Rate
Economists Predicted A Fall
Growth in the service sector, as measured by the Institute for Supply Management (ISM), expanded last month at the fastest pace in five years, data showed. ISM's purchasing manager's index, which analysts use to track economic growth in the U.S., increased to 58.6 in August, up from 56 in July. Economists had expected the ISM index would fall to 55. Notably, the reading was the highest measured by ISM since the group started tracking growth in non-manufacturing industries in 2008.
"The majority of respondents' comments continue to be mostly positive about business conditions and the direction of the overall economy," analysts wrote in the ISM report.
Sixteen industries – including education, construction and finance – tracked by ISM reported growth last month, while just two reported a drop. Additionally, the ISM's new-orders index rose from 57.7% in July to 60.5% in August and production climbed to 62.2%. The measure of employment improved to its best reading since February, up 3.8 points to 57.0%.
Recently, ISM reported similar August gains in the manufacturing sector, which accounts for 12% of the American economy. The closely-watched ISM manufacturing index rose from 55.4 in July to 55.7 last month, topping the predictions of analysts who forecasted a reading of 54. The August manufacturing tally was the index's highest since June 2011.