Service-sector growth picks up

Associated Press

NEW YORK

The U.S. service sector, the nation’s predominant employer, expanded in September for a ninth-straight month, although the growth has not been consistent enough to dent the high unemployment rate.

The Institute for Supply Management said Tuesday that its service-sector index rose last month to 53.2 from 51.5 in August. The rate hit a high point of 55.4 in March, stayed there in April and May, and has fluctuated since. Readings above 50 signal growth.

Weak consumer spending has kept the service industry, which employs about 83 percent of workers in the private sector, from gaining momentum after the recession ended. Economists say Tuesday’s reading was better than expected but not enough to change their outlook of high unemployment and slow job growth for the rest of the year.

Many expect Friday’s employment report to show the jobless rate rose in September to 9.7 percent from 9.6 percent and that 75,000 private-sector jobs were added. They predict the economy will grow at roughly a 2 percent rate for the rest of the year, not enough to lower unemployment.

“Obviously, a rise is better than a fall, but we’re still faced with an economy that is growing well below its trend rate and not fast enough to generate the job gains required to drive down the unemployment rate,” Paul Ashworth, senior U.S. economist for Capital Economics, said about the service-sector survey.

The survey polls about 350 companies in 18 industries, including health care, retail, utilities, education, financial services and shipping. In September, 11 of the industries reported growth. They were led by business management and administrative services, industries that provide information, and professional and scientific services. Three industries shrank, and four had the same pace of activity.