Service sector grows at fastest pace since summer

Reporting from Washington — The service sector expanded last month at its fastest pace since the summer, adding to recent upbeat news about economic growth after a harsh winter slowed the recovery.

The Institute for Supply Management said Monday that its purchasing managers index for non-manufacturing companies rose to 55.2 in April, from 53.1 the previous month.

The last time the index was higher was when it reached a post-Great Recession high of 57.9 in August.

The majority of respondents in the survey indicated that business conditions and the economy were improving, the ISM said.

The index is a closely watched barometer of growth in important service sectors such as construction, healthcare and retail.

Economists had expected a smaller increase to 54.2. A reading above 50 indicates that the sector is expanding. April was the 57th straight month the group’s service-sector index showed growth.

Last week, the ISM’s index for manufacturing businesses also exceeded analyst expectations, rising to 54.9, its best performance since December. And on Friday, the Labor Department reported strong labor market growth of 288,000 net new jobs in April.

The service sector is the largest part of the U.S. economy and the ISM’s index rose last month because of increased business activity, production and new orders. Inventories continued to grow.

But in a negative sign, the employment index fell and supplier deliveries also were down.

Of the 18 industries tracked by ISM, 14 reported growth, including construction, real estate, and hotels and restaurants.