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U.S. Service Sector Barely Growing

By John S. McClenahen Like the manufacturing sector of the U.S. economy, the service sector is growing, but just barely. The Institute for Supply Management's (ISM) non-manufacturing business activity index was 50.9% in August, down 2.2 percentage points from 53.1 in July. However, unlike its counterpart in ISM's PMI manufacturing index last month, the new orders component of the non-manufacturing index shows growth at 51.6% -- albeit a slower rate of growth than July's 52.6%. Nevertheless, August's overall service-sector figure was the index's lowest mark since January's 49.6%. Economists generally had expected the index to rise in August to about 54%. A figure above 50% indicates that the service sector of the economy is growing; a number below 50% suggests contraction.

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