Service Sector Shows Growth in September; Employment Remains Weak
Byline: David M. Dickson, THE WASHINGTON TIMES
Economic activity in U.S. service industries expanded in September for the first time in more than a year, indicating that the nation's nascent recovery that began in the housing and manufacturing industries may be becoming more broad-based.
But a report by the Institute for Supply Management's (ISM) showed that service-sector employment remained weak, a factor that economists said could significantly dampen the vigor of the emerging recovery, especially in terms of consumer spending.
Discounting the employment aspects of the report, the major stock market indexes jumped 1 percent or more on the better-than-expected news in the service sector and Goldman Sachs' upgrade of the banking sector.
The Dow Jones Industrial Average advanced 112.08 points to close at 9599.75. The broad-based Standard & Poor's 500 stock index increased 15.25 points to end the day at 1040.46. The tech-heavy Nasdaq Composite Index climbed 20.04 points to finish the day at 2068.15.
The ISM index for the non-manufacturing sector jumped to 50.9 in September from 48.4 in August, surpassing the expectations of most economists. The service sector accounts for more than 85 percent of U.S. economic activity.
Service industries burst into a general expansion mode in September for the first time in 13 months, said Brian Bethune, chief U.S. financial economist for IHS Global Insight.
It was the first time since August 2008 that ISM's non-manufacturing index exceeded 50. Readings above 50 indicate expansion, and readings below 50 reveal contraction.
For the economy to sustain growth, the non-manufacturing survey will need to rise firmly above 50, said Ryan Sweet of Moody's Economy. …