Service industries in the U.S. expanded in December at the fastest pace in 10 months, helping spur the world’s largest economy at the end of 2012.
The Institute for Supply Management’s non-manufacturing index climbed to 56.1 last month from 54.7 in November, the Tempe, Arizona-based group said today. Economists projected the gauge would drop to 54.1, according to the median estimate in a Bloomberg survey. Readings above 50 signal expansion.
A brighter holiday shopping season for retailers and an improvement in the housing market helped propel the industries that make up about 90 percent of the U.S. economy. Further services growth likely depends on how quickly the 12.2 million unemployed Americans can find the jobs needed to boost incomes and spur spending, helping assuage higher taxes in place for this year.
“The recovery we’re seeing in housing construction is likely offering support,” Michelle Meyer, a New York-based senior economist at Bank of America, said before the report. At the same time, “disposable income will be hit in the first quarter because of the increase in income taxes, which will be a drag to the consumer,” she said.
Stocks maintained gains after the figures, with the Standard & Poor’s 500 Index poised for its biggest weekly rally in 13 months. The S&P 500 climbed 0.2 percent to 1,462.42 at 10:26 a.m. in New York.
Estimates in the Bloomberg survey of 66 economists ranged from 52 to 56. The index, which includes industries ranging from utilities and retailing to health care, housing and finance, has averaged 53.6 since the recession ended in June 2009.
Another report today showed employers added workers in December at about the same pace as the prior month, while the unemployment rate matched a four-year low. Payrolls climbed by 155,000 workers last month after a revised 161,000 advance that was more than initially estimated, according to the Labor Department.
The jobless rate held at 7.8 percent after the November figure was revised up from a previously reported 7.7 percent.
The ISM’s employment gauge rose to 56.3, the highest since March, from 50.3 in the prior month, today’s report showed. The measure of new orders increased to 59.3, the highest since February, from 58.1. The gauge of business activity fell to 60.3 from 61.2.