WASHINGTON — U.S. service companies, which employ nearly 90 percent of the work force, grew in September at the fastest pace since March. The growth was driven by sharp increases in current and future sales.
The Institute for Supply Management said Wednesday that its index of non-manufacturing activity rose to 55.1, up from 53.7 in August. Any reading above 50 indicates expansion.
A separate private survey released Wednesday showed that U.S. businesses added fewer workers in September than August.
The ISM report measures growth in a broad range of businesses from retail and construction companies to health care and financial services firms. The service sector has grown for 33 straight months, based on the ISM survey.
The September survey points to a rise in consumer demand, which could help lift economic growth from its tepid pace and ultimately lead to more hiring.
A measure of current sales activity jumped to 59.9, up from 55.6 in August. And a gauge of new orders rose to 57.7, up from 53.7 in August.
Service companies kept adding jobs in September, although at a slower pace. A measure of hiring fell to 51.1, down from 53.8 in August.
The service sector has been a key source of job growth this year. Service firms have created an average of 133,000 jobs per month, or 95 percent of the net jobs added since January.
Payroll processor ADP said Wednesday that companies added 162,000 jobs last month. That’s below August’s total of 189,000, which was revised lower.
The September job increase was better than economists had expected. And it marks the latest in a string of modest hiring gains reported by the survey in recent months. Still, the gain isn’t enough to significantly push down the unemployment rate, which has been above 8 percent for three and a half years.
About 100,000 new jobs are needed each month just to keep up with the growth of the working-age population. Twice as many are typically needed on a consistent basis to bring unemployment down rapidly.
“While the economy isn’t plunging into recession, it still isn’t creating enough jobs to drive the unemployment rate lower either,” said Paul Ashworth, chief U.S. economist at Capital Economics.
The report only covers hiring in the private sector and excludes government employment.
The Labor Department will offer a more complete picture of September hiring on Friday.
The ADP and government surveys often diverge.
In August, the government said private companies added 103,000.