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Service sector growth picked up in July, index shows

By Jim Puzzanghera, Los Angeles Times –

WASHINGTON — The growth of the U.S. service sector picked up in July, beating analyst expectations and providing another good — though not great — economic sign Friday.

The Institute for Supply Management’s non-manufacturing index increased to 52.6 percent from 52.1 percent in June. Analysts had expected it to stay flat.

The improved reading came as the government reported the U.S. economy created 163,000 net new jobs in July, also beating expectations. The unemployment rate increased to 8.3 percent from 8.2 percent.

Neither the ISM nor the Labor Department report indicated robust economic growth. But after months of dismal economic news, the reports were a sign the recovery might be turning the corner after a severe slowdown in the first half of the year.

July was the 31st consecutive month of growth in the service sector, which makes up about 90 percent of the economy, according to ISM. It reported that 11 industries grew in July, including retail trade; finance and insurance; entertainment and recreation; and hotel and food services.

Seven industries contracted in July. Among them were construction, health care, agriculture and transportation.

The service sector report came after ISM said Wednesday that the manufacturing sector contracted slightly in July for the second straight month.

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