The service sector expanded in April, with business activity accelerating at the strongest pace in four years. þþThe Institute for Supply Management, a trade group of purchasing executives, said Wednesday that its service sector indexread 55.4 in April, the same level as in March. A reading above 50 indicates growth, and April was the fourth consecutive month of growth. þþEconomists polled by Thomson Reuters had expected a stronger reading of 56. þþThe service sector accounts for 80 percent of American jobs, in areas like health care, retail and financial services. It has lagged behind the smaller manufacturing sector in the recovery as consumers curtailed their spending. þþWhile employment data released from other market trackers Wednesday pointed to a brightening jobs picture, the trade group’s jobs index contracted for the 28th consecutive month in April despite strong growth in business activity. þþThe payroll company ADP reported on Wednesday that private employers added 32,000 jobs last month, with service providers adding 50,000 jobs. þþThe government reports Friday on April employment. Economists expect employers to add 200,000 jobs, which would be the biggest jobs gain since March 2007. The unemployment rate is expected to stay at 9.7 percent. þþThat’s “pretty modest” employment growth, said Ryan Wang of HSBC. Of the increase of 200,000 jobs forecast for April, HSBC predicts 135,000 will come from temporary hires by the Census Bureau. þþThe service sector is getting a lift from improving retail sales after their plunge a year ago, and from industries associated with manufacturers, he said. But they remain cautious about hiring, he added. þþJennifer Lee, an economist with BMO Capital Markets, said even though the service sector index was lower than expected, it still shows the non-manufacturing sector has grown in the last four months. þþ“That is key as industries outside of manufacturing account for about 80 percent of the U.S. economy and is thus a good indication that the economy is spreading beyond the manufacturing base,” Ms. Lee said. þþThe Institute for Supply Management said its measure of business activity rose to 60.3, the strongest pace of expansion since April 2006, and a measure of new orders remained high. New orders signal future business. þþFourteen of the 18 industries surveyed said they grew in April, led by arts and entertainment, real estate, the information sector, agriculture, and management and back-office support services companies. þþThe four industries that shrank were utilities, education, health care and social services, and professional and scientific services. þþ
Source: NY Times
