The Institute for Supply Management, a private trade group, said Tuesday that its index for service companies rose to 53.3 in August from 52.7 in July. Any reading above 50 indicates expansion.
The service sector includes businesses like restaurants, hotels, health care companies and financial service companies. It has grown in all but one month over the last two years. The index reached a five-year high of 59.7 in February.
Still, the rate of growth among service businesses has declined in four of the last six months. High gas prices and scant wage gains have left consumers with less money to spend on services.
The private trade group said its gauge of hiring for service companies fell last month to an 11-month low. That reflected Friday’s grim government report that showed that the economy added no net jobs in August.
“While the modest August bounce in the I.S.M. index for services is good news, it does not change the overall picture of an economy that is slowly unwinding and losing momentum,” said Brian A. Bethune, an economics professor at Amherst College.
Retail and wholesale trade, transportation services and hotels all showed strength in August, according to the report. Educational service companies, recreation and entertainment firms, and health care, finance and insurance businesses all reported declines.
Last week, I.S.M. said its manufacturing index fell in August to 50.6, barely above the 50 threshold that separates contraction from growth.
The nation’s economy expanded in the first six months of the year at an annual rate of just 0.7 percent — the slowest growth since the recession officially ended two years ago.
Since then, consumer and business confidence have been hurt by a spate of bad economic news: lawmakers in Washington fought over raising the federal borrowing limit, Standard Poor’s downgraded its rating on long-term United States debt, the debt crisis in Europe worsened and the stock market tumbled in late July and early August. The Dow is nearly 14 percent lower than its close on July 21.
President Obama will offer a plan to increase job growth during an address to a joint session of Congress on Thursday.
Still, the president is unlikely to win support for any stimulus spending from Congressional Republicans, who say the president’s economic policies have failed. They say they want further spending cuts and less government regulation.
The economy needs to add 250,000 jobs a month to make a major dent in the unemployment rate, which has been above 9 percent in all but two months since May 2009.
Many economists believe that the economy will grow only 2 percent in the second half of this year, far below the pace needed to generate significant job gains.
Article source: http://feeds.nytimes.com/click.phdo?i=952e9ce8c0e8812b0306cd327ba60b59
Speak Your Mind
You must be logged in to post a comment.