U.S. service sector grew in July, ISM report says

The U.S. service sector, the largest part of the economy, grew sharply in July

The nation’s service sector posted strong growth in July, evidence the economy is accelerating in the second half of the year.

The Institute for Supply Management said Tuesday that its non-manufacturing index rose nearly 3 points from June to 58.7, the highest reading since the index debuted in January 2008.

The rate of growth—led by the construction industry—beat expectations.  The median forecast for economists polled by Bloomberg News was 56.5. Any reading above 50 signals growth.

Business activity, new orders and employment all increased, ISM said. 

The index is a closely watched gauge of the health of the U.S. service sector, the largest portion of the economy and includes industries such as construction, health care and retail.

Another report Tuesday showed growth in the manufacturing sector. The Commerce Department said factory orders rose 1.1% in June from a month earlier.

Increased demand for machinery, aircraft and electronic products helped beat expectations of a 0.6% rise.

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