"The pickup in July wasn't limited to the manufacturing sector"
- Brian Jones, senior U.S. economist at Societe Generale
Services sector in the world's largest economy expanded last month at the fastest pace in five months, another sign the economy will gather momentum after slowing the last three quarter. Figures from the Institute for Supply Management showed that non-manufacturing index surged to 56 in July, exceeding all forecasts, and much higher than previous month's figure 52.2, which was a more than three-year low. Any reading above 50 indicates growth in the industries that make up about 90% of the economic output. The non-manufacturing Business Activity Index hiked 8.7 points to 60.4, hitting the highest reading since December 2012, while the measure of new orders surged 6.9 points to 57.7, posting the 48th consecutive month of gains. Employment gauge, however, gave a worse performance at 53.2, 1.5 points less than in the preceding month, reflecting a slowdown in the pace of hiring.
The figures are following last week's report showing manufacturing advanced at the fastest rate in more than two years, suggesting a broader expansion. The recovery in the country's housing market and record-high equity values, are bolstering household finances, suggesting we might soon see a pickup in consumer spending on goods and services, which accounts for almost 70% of the economy.
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