U.S. services sector expands strongly as orders, employment rise

May 4th, 2016  |  Source: Reuters

The vast U.S. services sector expanded in April as new orders and employment accelerated, bolstering views that economic growth would rebound after almost stalling in the first quarter.

The growth outlook was, however, dimmed by other data on Wednesday showing private employers hired the fewest number of workers in three years in April.

The Institute for Supply Management said its nonmanufacturing index rose 1.2 percentage points to a reading of 55.7 in April.

A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of the U.S. economy. Services industry activity was last month buoyed by a 3.2 percentage point surge in new orders.

A gauge of services sector employment rose to 53.0 last month from a reading of 50.3 in March.

That strong increase should offset concerns about the labor market, which had been stoked by the ADP National Employment Report showing private payrolls increased 156,000 last month, the smallest gain since April 2013, after rising 194,000 in March.

The ADP report, which is jointly developed with Moody's Analytics, was published ahead of the government's more comprehensive employment report for April due on Friday.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 202,000 jobs in April after rising 215,000 in March. The unemployment rate is forecast holding steady at 5.0 percent.

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