Service sector expands in July at fastest pace in 5 months

Los Angeles Times

WASHINGTON — The nation’s service sector, a crucial economic component, expanded in July at its fastest pace in five months, the Institute for Supply Management said Monday.

The group’s purchasing managers’ index for nonmanufacturing businesses rose to 56 last month, from June’s 52.2. A reading above 50 indicates the sector is expanding.

The June reading was the lowest since early 2010, raising concerns about a summer slowdown.

But service-sector growth rebounded sharply last month. The pace beat analyst expectations and was the best since February, ISM said.

Of the 18 industries the index tracks, 16 reported growth in July, including construction, real estate, finance, and hotel and food services.

The two sectors reporting contraction were mining and health care and social assistance.

The sector’s business activity and production index jumped to 60.4, from 51.7, marking the best reading since December. A sign of future activity, the new orders index, rose to 57.7, from 50.8.

But unlike ISM’s manufacturing index data released last week, showing U.S. factories expanding at their fastest pace in two years, not all the signs in the services sector were positive.

Employment growth slowed in July. The ISM employment index fell to 53.2, from 54.7. That’s a discouraging sign given Friday’s government report that job growth slowed in July from the previous month.

“The slowdown in employment growth is a concern, and the jump in the business activity index has more to do with sentiment than actual activity,” said Paul Edelstein, director of financial economics at IHS Global Insight.

“But it appears that the slow (descent) toward stagnation that began in March, on both the manufacturing and non-manufacturing sides, is over,” he said.

More in Herald Business Journal

Snohomish County’s campaign to land the 797 takes off

Executive Dave Somers announced the formation of a task force to urge Boeing to build the plane here.

A decade after the recession, pain and fear linger

No matter how good things are now, it’s impossible to forget how the collapse affected people.

Panel: Motorcycle industry in deep trouble and needs help

They have failed to increase sales by making new riders out of women, minorities and millennials.

Costco rises as results display big-box retailer’s resiliency

Their model has worked in the face of heightened competition from online, brick-and-mortar peers.

For modern women, 98-year-old rejection letters still sting

In a stark new video, female Boeing engineers break the silence about past inopportunity.

Tax reform needs the public’s input on spending priorities

The GOP tax plan is a good idea, but the next step should give us a voice on how taxes are spent.

Commentary: GM, Boeing fight a war of words over Mars

Boeing is strongly signaling how crucial deep-space exploration is to its future.

Under cloud of ethics probes, Airbus CEO Enders to step down

He leaves in 2019 after 14 years. Meanwhile, aircraft division CEO Fabrice Bregier leaves in February.

$4.99 sandwich promotion irks some Subway business owners

Management insists that “most franchisees support the promotion.”

Most Read