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US service sector grows at quickest pace in six years

Service-sector economic activity surged last month, growing at the most rapid pace in nearly six years, according to data released Tuesday.

The Institute for Supply Man-agement said that its non-manufacturing index moved to 65.1 from 60.6 in June and 54.5 in May. Readings above 50 indicate growth in activity, while those below point to contraction.

The July reading, which marked the fourth straight month of growth and the best reading since July 1997, was considerably better than the 59.0 reading predicted by economists.

The ISM said that the service-sector report, which covers the over two-thirds of the US economy not involved in producing goods, was aided by broad-based growth in new orders, order backlogs and imports, although employment posted only modest gains.

The group noted that the purchasing and supply executives surveyed are generally more optimistic than earlier in the year.

Service-sector activity has for some time been the bulwark of growth in the US, and has proved more resilient to the forces that have caused trouble in the rest of the economy over the past several years.

The ISM report comes amid broad signs that the US economy is finally showing some vigor. Last week, the ISM reported that its manufacturing index moved toward growth for the first time in five months.

However, employment growth, a key barometer of economic health, has been lagging.
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