Service Sector in Surprise Rebound

NEW YORK — Encouraging news for the slumping U.S. economy came Monday as a key survey of non-manufacturing business executives showed unexpected growth in the service sector in April.

The Institute for Supply Management's (ISM) non-manufacturing index rose to a reading of 52 from 49.6 in March. Economists were expecting a reading of 49.5, according to a consensus compiled by Briefing.com.

A reading above 50 indicates growth in the sector.

Prior to January's report, the non-manufacturing index was only based on business activity, but it now equally measures business, orders, employment and supplier deliveries. This is the first time since the index's face lift that it registered a positive reading.

The reading for business activity in the service sector showed expansion but fell to 50.9 in April from 54.2 in March.

The service sector encompasses the retail, transportation and health care sectors. It also includes sectors that have been hit hard by problems in the economy, including finance, real estate and construction.

The report also showed encouraging non-manufacturing labor growth. After three consecutive months of contraction, the service sector employment index rose 3.9 points to 50.8.

The ISM report showed 22 percent of service sector employers were adding staff, up from the 14 percent doing so in March.

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