U.S. ISM Service Sector Expand More Than Forecast, Up 50.6%

New York, NY (AHN) - Service sector in the U.S. economy surprisingly improved in the month of August, a report said on Thursday.

The Institute for Supply Management showed in its monthly report that non-manufacturing sectors in the U.S. has expanded more than forecast for the month of August.

The non-manufacturing index increased to 50.6 percent last month, compared to its rise of 49.5 percent in the month of July, according to a key ISM report released on Thursday.

A reading of the index above 50 indicates that it is expanding, while a reading below 50 is a sign of overall business contraction.

The report on the ISM index indicated that there are signs of easing concern on the slowing down of the world's largest economy and that it may not experience deep recession.

The Tempe-Arizona-based group reported that ten out of 18 industries reported growth in August including real estate, rental and leasing; mining; health care and social assistance; educational services; utilities; agriculture, forestry, fishing and hunting; construction; professional, scientific and technical services; other services; and information.

The market analysts on Wall Street had projected that the index would remain unchanged at 49.5 percent during last month on higher fuel charges and rising raw-material costs.

Some analysts speculate that the current expansion could be result of the weakened U.S. dollar, which helped rise in export orders.

Non-manufacturing activity increased led by the demand from the international market for the U.S.-made products as the U.S. consumer spending declined.

The report showed that eight out of 18 industries were contracting in the month of August including transportation and warehousing; finance and insurance; accommodation and food services; wholesale trade; arts, entertainment and recreation; management of companies and support services; retail trade; and public administration.

The ISM employment gauge weakened to 45.4 percent in August, which is the fourth straight month of contraction, compared to 47.1 percent reading in July.

The inventory index for non-manufacturers declined to 53.5 percent in August, from 54.5 percent in July.