WASHINGTON — Companies in the U.S. service sector expanded at their fastest pace in nearly 8 years last month as sales and orders grew and employers ramped up hiring.
The Institute for Supply Management said this morning that its service-sector index rose to 58.6 in August from 56 in July. It’s the highest point since December 2005.
Reading above 50 indicates expansion.
A measure of hiring rose to 57, the most in six months. That’s an encouraging sign for the job market because the service sector employs 90 percent of the U.S. workforce, including retail, construction, health care and financial services.
Consumers appear to be spending more at auto dealerships, retailers, hotels and restaurants. The housing recovery is also spurring growth in real estate.
The report “implies that the economic recovery is gathering a real head of steam,” said Paul Dales, an economist at Capital Economics.
The upbeat figures come after another report today showed that weekly applications for unemployment benefits fell to nearly their lowest level in five years.
All together, Thursday’s reports suggest that the job market is improving steadily.