NEW YORK — The U.S. service sector grew in September for the first time in 13 months, an encouraging sign for the fledgling economic recovery although jobs remain scarce.
The Institute for Supply Management said its service index hit 50.9 last month, up from 48.4 in August. Analysts polled by Thomson Reuters had expected a reading of 50, the dividing line between growth and contraction.
The index, which tracks more than 80 percent of the country’s economic activity, including hospitals, retailers, financial services companies and truckers, hadn’t grown since August 2008.
The new orders index, an indicator of future activity, jumped to 54.2 in September from 49.9 a month before, the first growth reading in a year. Present business activity rose to 55.1 from 51.3 in August.
Service-sector employment shrank in September but at a slightly slower pace than in August. The reading of 44.3, up from 43.5, was the 20th month of contraction in 21 months.
Despite the overall growth, the chair of the ISM’s service survey committee was not “overly excited” about September’s report and said several months of growth are needed to establish a pattern of recovery.
“This has to be sustainable,” Anthony Nieves said on a conference call with reporters.
The service sector is highly dependent on consumer spending, which powers about 70 percent of the economy. While Americans’ spending rose 1.3 percent in August, the best showing since October 2001, a third of that gain came from the government’s now-ended Cash for Clunkers program. The government also reported that incomes rose only 0.2 percent in August.
The report is based on a survey of the institute’s members in 18 industries and covers indicators such as new orders, employment and inventories. Five industries grew last month: utilities, health care, retail, construction and wholesale trade. The other 13 contracted.
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