Aug. 5, 2013, 10:54 a.m. EDT
Service side of economy speeds up in July
U.S. ISM index jumps to highest level since the end of winter
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — U.S. service companies such as retailers, financial firms and educational providers grew in July at the fastest pace in five months in another sign that the economy might be picking up after lackluster second quarter.
The Institute for Supply Management on Monday said its service index jumped to 56% in July from 52.2% in the prior month, marking the highest level since February. The ISM’s manufacturing survey issued last week also posted a similarly large gain in July.
Economists surveyed by MarketWatch had expected the ISM services index to rise to 53.1%. Any number over 50% indicates more companies are expanding than contracting.
Surveys of business executives, however, are sometimes volatile, and economists warn that it could take several months to determine if a trend is developing.
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Who’s hiring in the U.S. and what they pay
The U.S. has regained more than four-fifths of the 8.8 million jobs lost in the private sector during the recession. The bad news is, it will be at least until 2014 for the prior high to be reached.
• 162,000 jobs created in U.S. during July
• ISM manufacturing index surges in July
• U.S. jobless claims at five-year low
• U.S. economy grows 1.7% in second quarter
The increase in the index stemmed mostly from an increase in production and new orders. The ISM’s production index surged to 60.4% from 51.7% — a seven-month high — while the new-orders index increased to 57.7% from 50.8%.
Sixteen of the 18 industries tracked by Tempe, Ariz.-based ISM reported growth last month, up from 14 in the June.
“Respondents’ comments are mostly positive about business conditions and the overall economy,” said Anthony Nieves, who chairs the ISM committee that produces the report.
The only downsides to the report was a small drop in hiring intentions and an increase in commodity prices.
The employment index dipped 1.5 percentage points to 53.2%, though it remained well above the 50% cutoff mark that signals deterioration. The services side of the economy employs more than four of every five U.S. workers.