NEW YORK (AP) - The nation's service economy unexpectedly expanded in April
after contracting for the previous three months.
The Institute for Supply Management's index of the service sector released
Monday showed a better-than-expected reading of 52 for April, up from 49.6 in
March. Wall Street economists surveyed by Thomson Financial/IFR had expected a
reading of 49.3.
A reading above 50 indicates the sector is growing, while a reading below 50
indicates contraction.
Citigroup Inc. economist Steven Wieting said he took the reading with a
grain of salt, saying the services report the group puts out "has a much more
limited history" than its long-running and important manufacturing index.
"Some of the industries that showed up in the 'improving' column were
construction and real estate," Wieting said. "I'm sure we're going to see that
someday. I'd just like confirmation."
The services sector accounts for almost 70 percent of the nation's economy,
but the report contrasts with recent economic indicators suggesting weakness,
such as declining auto sales, chain store sales and employment data.
The Institute for Supply Management's recent reading of the manufacturing
sector contracted in April, stalled near its lowest level in five years.
Even with the positive reading for the service economy, "I think it
indicates that the non-manufacturing sector is bordering on zero growth," said
Dan Meckstroth, chief economist of the Manufacturers Alliance, a trade group.
"It fits with a scenario of a very mild recession."
The services index fell steeply in January to 44.6, its first drop below 50
since March 2003, and was below 50 in February and March.
(This version CORRECTS to "reading" in 2nd graf)
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