Services Sector Hits Record Speed In July

By Agence France-Presse The vast U.S. services sector unexpectedly revved up to the fastest pace in at least six years in July, an industry survey showed Aug. 5, throwing fuel on smoldering recovery hopes. The Institute for Supply Management (ISM) said its index of non-manufacturing activity rose to a record 65.1% in July from 60.6% in June. It was fourth increase in a row, defying Wall Street analysts' forecasts of a slowdown and taking the barometer to the highest level since it was first published in July 1997. Any figure above 50% indicates an expansion in activity. "Overall it is very encouraging and suggests the economic turnaround has begun," said BMO Financial Group economist Sal Guatieri. New orders gathered speed, with the index up to 66.9% in July from 57.5% in June. The backlog of orders also rose at a swifter pace, sending the index up to 54.5% from 51.5%. Employment increased at a marginally faster rate, sending the index up to 50.7% from 50.3%, and indicating the second month in a row of expanding employment in services. "It looks like the labor market could be turning the corner now," BMO Financial Group's Guatieri said. But employers announced 85,117 job cuts in July, up 42.5% from June, according a separate survey by a private outplacement firm Challenger, Gray and Christmas. Copyright Agence France-Presse, 2003