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U.S. service sector grows
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January 4, 2002: 10:53 a.m. ET
ISM's non-manufacturing index shows faster growth in December.
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NEW YORK (CNN/Money) - The pace of business activity in the U.S. service sector quickened in December, the nation's purchasing managers said Friday, as a traditional area of economic strength continued to recover from the Sept. 11 terror attacks.
The Institute for Supply Management, formerly the National Association of Purchasing Management, said its index of non-manufacturing activity rose to 54.2 percent in December from 51.3 percent in November. Economists surveyed by Briefing.com expected an index reading of 50.0 percent.
A reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction.
Activity in the service sector, usually a reliable source of growth for the U.S. economy, dropped sharply in the wake of last September's terror attacks. It rebounded in November, and December's stronger gain indicates longer-lasting strength, the ISM said.
"This second month of non-manufacturing growth, at a higher rate of growth than in November, appears to indicate that November's growth was not entirely due to a rebound from October's low point following the events of Sept. 11," said Ralph Kauffman, chairman of the ISM's non-manufacturing business survey committee.
December's level of service activity was the highest since December 2000, the ISM said, and was accompanied by strong gains in new orders, which began expanding again, rising to 52.6 percent from 48.3 percent in November.
The ISM's employment index improved to 45.1 percent from 44.3 percent in November, meaning the sector continued to shed jobs, but at a slower pace.
The broader U.S. economy has lost about 1.4 million jobs since March, the Labor Department said Friday, and the unemployment rate has risen to 5.8 percent during a prolonged slowdown that some economists think became a recession in March.
The common definition of a recession, two straight quarters of shrinking gross domestic product (GDP), hasn't yet been met; but GDP shrank in the third quarter and could do so again in the fourth. 
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