Service Sector’s Growth Speeding Up, Survey Finds

The service sector, the biggest part of the U.S. economy, grew at a stepped-up pace in November, a survey of purchasing executives found Friday.

The Institute for Supply Management’s index of non-manufacturing industries, including financial services and retail trade, rose to a four-month high of 61.3 after increasing to 59.8 in October. The gauge has shown expansion, marked by readings greater than 50, since April 2003.

Consumer spending rose more than expected in October, and the institute’s manufacturing survey this week showed the first acceleration since July. Employers added workers for a 15th month in November, and incomes rose 0.6% the previous month, the biggest increase since May.

“Demand for services from consumers is quite strong,” said Christopher Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi in New York. “Even if they aren’t making the same number of trips to the mall, consumers are traveling and banking and going to the movies.”

The service index rose as a smaller share of executives, less than 10%, reported a decline in business. About a third reported increased business, the same as in October. The share reporting no change rose to 57% from 51%.

Measures of orders and employment, which are separate from the general index, showed continued expansion. Supply bottlenecks, a measure of demand, increased. A measure of employment showed increased hiring for a fourth month.

Service employment rose by 104,000 last month, accounting for almost all the 112,000 increase in U.S. payrolls, the Labor Department reported Friday. Hiring by service providers had risen by 241,000 in October, the most since April.

A measure of new orders for non-manufacturing companies slipped to 59.9 from 60.5. The index of order backlogs rose to 54 from 52.5. The inventory index rose to 52.5 from 50. The employment index fell to 55 from 55.8.

Prices paid, a measure of costs for purchased materials and services, fell to 71 from 74.1.