Service sector grows in September

WASHINGTON — The nation’s service sector expanded for a ninth straight month during September, a report showed Tuesday, with key employment numbers registering growth for the third time in the last five months.

The Institute for Supply Management’s nonmanufacturing index climbed to 53.2%, up from 51.5% in August and coming in stronger than the 52.3% expected in a survey of economists.

Readings higher than 50% indicate expansion.

Of the indexes that compose the ISM poll, the business activity index slowed 1.6 percentage points in September to 52.8%, the new orders index climbed 2.5 percentage points to 54.9% and the employment index added 2 percentage points to 50.2%.

The employment index was of particular interest ahead of the government’s pivotal report on unemployment, which is due Friday.

Although the index was stronger than forecast, it nonetheless indicates a slow-growing economy. September’s reading of 53.2% was the second-worst reading since February.

Responses from purchasing managers who were surveyed included: the “general state of the business has not changed in the last three months,” from a manager in the construction index, and “business seems to be flat from last month,” from a manager in the finance and insurance sector.

Joshua Shapiro, chief U.S. economist at MFR Inc., said the data undercut worries that the economy will slip back into recession.

The ISM service results for September are “consistent with the notion that while the recovery remains a weak one, a double dip is not in the offing (at least anytime very soon), and this message is in sync with most other data as well,” he said in a note to clients.

Goldstein writes for MarketWatch.com/McClatchy.