WASHINGTON (AP) — Companies in the U.S. service sector expanded at their fastest pace in nearly 8 years last month as sales and orders grew and employers ramped up hiring.
The Institute for Supply Management said Thursday that its service-sector index rose to 58.6 in August from 56 in July. It's the highest point since December 2005. Any reading above 50 indicates expansion.
A measure of hiring rose to 57, the most in six months. That's an encouraging sign for the job market because the service sector employs 90 percent of the U.S. workforce, including retail, construction, health care and financial services.
On Friday, the Labor Department will issue the August jobs report.
Consumers appear to be spending more at auto dealerships, retailers, hotels and restaurants. The housing recovery is also spurring growth in real estate.
The report "implies that the economic recovery is gathering a real head of steam," said Paul Dales, an economist at Capital Economics.
The upbeat figures come after another report Thursday showed that weekly applications for unemployment benefits fell to nearly their lowest level in five years. Also, a private survey found that U.S. businesses added 176,000 jobs last month, below the previous month but roughly in line with the average gain this year.
All told, Thursday's reports suggest that the job market is improving steadily. That will weigh heavily in the Federal Reserve's deliberations when it meets later this month to consider whether to slow its monthly bond purchases.
If you owe under $729k you may qualify for 3.05% APR Govt Refi Plans.