NEW YORK - A gauge of the U.S. service sector returned to growth last month, aided by the holiday season's retail sales. The expansion reflected a slowly improving economy - but it was too slight to generate much hiring.
The Institute for Supply Management, a private trade group, said Wednesday that its service index rose to 50.1 in December from 48.7 in November. A level above 50 signals growth. Seven industries out of 18 reported growth, led by agriculture and retail.
The ISM’s employment gauge, which hasn’t grown in two years, shrank again in December, though at a slower pace than in November. It reached 44 in December, compared with 41.6 a month earlier.
Job generation throughout the economy has been weak even as layoffs have slowed. Economists expect the Labor Department to report Friday that the unemployment rate ticked up to 10.1 percent in December from 10 percent in November and that the economy lost a net total of 8,000 jobs.
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The ISM said the four service-sector groups that added jobs in December were retail, finance and insurance, public administration and a category of other services.
Retailers added temporary workers, as they normally do for holiday shopping seasons.
The overall service-sector gauge returned to growth in September for the first time in 13 months. But the comeback has been fitful amid scant gains in consumers’ incomes and weak bank lending.
The ISM’s service-sector gauge is closely watched because service jobs make up more than 80 percent of non-farm U.S. employment.
“We don’t think the increase was all that convincing,” said TD Securities’ Millan Mulraine, because growth in new orders slowed and employment still signaled contraction.