Service industries in the U.S. expanded in August at a faster pace than forecast, offering support to an economy that lost momentum in the first half of the year.
The Institute for Supply Management’s non-manufacturing index climbed to a three-month high of 53.7 from 52.6 in July, the Tempe, Arizona-based group said today. Readings above 50 signal expansion, and economists projected 52.5 for August, according to the median estimate in a Bloomberg survey.
A sustained pickup in service industries will help make up for three straight months of contraction in manufacturing and may create more employment opportunities as the jobless rate exceeds 8 percent. At the same time, FedEx Corp. is among companies seeing waning demand as rising gas prices, cooling global economies and diminished business investment hold back U.S. growth.
“Services have held in there,” Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, said before the report. “The service sector is actually doing better than manufacturing in terms of growth, which is a change from what’s been going on in the past few years.”
Economists’ estimates in the Bloomberg survey ranged from 51 to 53.5. The gauge has averaged 53.3 since the recession ended in June 2009.
Stocks held gains after the figures and as the European Central Bank announced specifics of its bond-buying plans aimed at shoring up the economy. The Standard & Poor’s 500 Index climbed 1.4 percent to 1,422.41 at 10:13 a.m. in New York.
Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, another report today showed. Applications for jobless benefits decreased 12,000 in the week ended Sept. 1 to 365,000, the fewest in a month, Labor Department figures showed.
Companies added more workers in August than projected, according to a report from Roseland, New Jersey-based ADP Employer Services. The 201,000 gain was the most in five months and followed a 173,000 rise the prior month that was higher than initially estimated.
The ISM non-manufacturing survey’s employment gauge rose to 53.8, the highest since April, from 49.3 in the prior month. The measure of new orders decreased to 53.7 from 54.3. A gauge of business activity dropped to 55.6 from 57.2. The index of prices paid increased to 64.3 from 54.9.