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Service sector growth up in September, private ISM index shows

WASHINGTON -- The U.S. service sector grew at a faster rate in September than in the previous month, according to a key index updated Wednesday, another positive economic sign before Friday’s government jobs report.

The Institute for Supply Management’s non-manufacturing index increased to 55.1 in September, up from 53.7 in August. Economists had expected the group’s purchasing manager’s index to dip slightly this month.

Instead, the widely watched gauge showed the large U.S. service sector grew for the 33rd straight month and at a faster rate than in recent reports. Over the last year, the index has averaged 54.1.

A reading over 50 indicates the sector, which includes transportation, retail trade, construction, food services and healthcare, is growing.

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The sector was boosted by an increase in new orders. Employment grew for the second straight month, but the rate was lower than in August.

Although growth was up overall, ISM said respondents to its monthly survey continued to have a mixed view of economic conditions. The majority were slightly more positive about current business conditions than they were in August.

Wednesday’s report followed a rise in ISM’s September manufacturing index, which was released Monday. That index on factory growth had shown a small contraction from June through August.

The reports of growth in the manufacturing and service sectors came as private payroll firm Automatic Data Processing Inc. reported Wednesday that the private sector added 162,000 jobs in September.

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The figure was above analyst expectations of about 140,000, though ADP has overshot the government’s reports on private-sector job growth in recent months. 

The Labor Department will release its September unemployment report on Friday. Economists surveyed by Bloomberg forecast an increase of 128,000 private sector jobs.

The Bloomberg forecast, including the struggling government sector, is for 115,000 net new jobs overall in September, which would be an improvement over August’s 96,000 jobs but still sluggish. The unemployment rate would rise to 8.2% from 8.1%, those economists projected.

ALSO:

Decline in factory jobs clouds employment outlook

Eurozone unemployment rate at record 11.4% in August

Manufacturing grew in September after three-month contraction

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