NEW YORK — A measure tracking the U.S. service sector returned to growth last month, helped higher by the holiday season’s retail sales, but the slight expansion wasn’t enough to kick-start hiring.
The Institute for Supply Management, a private trade group, said its service index rose to 50.1 in December from 48.7 in November. Analysts polled by Thomson Reuters had expected a reading of 50.5.
A level above 50 signals growth. The gauge rose in September for the first time in 13 months, but the comeback has been fitful amid tiny gains in consumers’ incomes and tight bank lending to small businesses.
Seven industries reported growth, led by agriculture and retail.
ISM’s service-sector gauge is closely watched because service jobs comprise more than 80 percent of non-farm U.S. employment.
ISM said its employment measure shrank in December, but at a slower pace than in November. It hasn’t grown in 2 years. The employment index was 44 in December versus 41.6 a month earlier. The four industry groups adding jobs were retail, finance and insurance, public administration and what is called other services.
Meanwhile, new orders, a signal of future business, expanded for the fourth straight month, although less quickly than in November. Business activity also grew, as did the prices paid by businesses.
That may mean service companies will pass their higher costs on to consumers, collecting higher revenue.
More spending by U.S. consumers will translate into higher sales for the nation’s service providers — and eventually, should mean more jobs.
ISM said on Monday that manufacturing grew in December for the fifth straight month. A rebound in the industrial sector has been helping the U.S. limp out of the recession, but manufacturing doesn’t add many American jobs. The service sector, which depends on consumer spending and tends to be less efficient, is currently the key to job creation.
The ADP National Employment Report said Wednesday that 84,000 private-sector jobs were lost in December, an improvement from November. ADP said private nonfarm employment in the service sector grew by 12,000 jobs, while manufacturing lost 43,000 jobs.
Kevin Jones of The Trucker staff can be reached for comment at email@example.com.