Service Sector Index Up in March

A gauge of U.S. service industries unexpectedly jumped to a record in March as orders and employment climbed, and a survey released Monday of corporate chief executives showed their confidence in the economy was the highest in more than 20 years.

The Institute for Supply Management’s index of financial services, construction, retail and other non-manufacturing enterprises rose to 65.8 in March from 60.8 the month before, exceeding the previous record of 65.7 in January.

Readings higher than 50 indicate expansion. The report was started in 1997.

The measure of service industries, which was higher than all 54 forecasts in a Bloomberg survey of economists, builds on Friday’s government estimate that the economy added 308,000 jobs last month.

The reports bolstered expectations that the Federal Reserve might raise interest rates this year and prompted some economists to consider raising second-quarter growth forecasts.

Meanwhile, chief executives may be gaining optimism and are showing that in their hiring plans, a quarterly survey indicated.

The New York-based Conference Board’s index of business confidence rose to 73 in the first quarter from 66 in last year’s final three months.

The reading was the highest since a reading of 74 in the last quarter of 1983. Index readings above 50 indicate more positive than negative responses.

“Half of all CEOs surveyed anticipate an increase in hiring plans over the course of the year, suggesting labor-market growth should gain momentum in the months ahead,” said Lynn Franco, director of the Conference Board’s Consumer Research Center.

The quarterly report by the private research firm covers chief executives in a wide variety of industries.

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Bloomberg News and Reuters were used in compiling this report.