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Published: Thursday, 7/7/2011

Growth in service jobs slows

Analysts cite sluggish U.S. economic recovery

ASSOCIATED PRESS
Jobs in the service industry continued to grow in June, but at a slower pace from May, according to an index developed by the Institute for Supply Management. The measurement covering the sector that employs nearly 90 percent of the U.S. work force reached  a five-year high in February. Jobs in the service industry continued to grow in June, but at a slower pace from May, according to an index developed by the Institute for Supply Management. The measurement covering the sector that employs nearly 90 percent of the U.S. work force reached a five-year high in February.
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WASHINGTON -- The U.S. service sector, which employs nearly 90 percent of the country's work force, expanded for a 19th consecutive month in June. But growth slowed from May, a sign that the economy remains sluggish.

The Institute for Supply Management said Wednesday its index for service companies dipped to 53.3 in June from 54.6 in May. Any reading above 50 indicates expansion.

The private trade group measures activity for a broad range of industries, including retail, health care, financial services, and construction.

The index reached a five-year high of 59.7 in February. But since then growth has retreated.

The index fell to 52.8 in April, the lowest reading since August.

High gas and food prices have shrunk consumer spending on discretionary items such as vacations, appliances, and furniture. That's hurt retailers, restaurants, and hotels.

Paul Ashworth, chief U.S. economist at Capital Economics, said the service sector report "is a reminder that the economy is still pretty sluggish." He said the reading for June was consistent with overall growth of around 2 percent in the April-June quarter.

That's roughly the same pace as the anemic 1.9 percent pace in the first three months of the year.

An employment index in the service sector report showed a gain in June. That suggests hiring expanded for a 10th straight month and at a slightly faster pace than in May.

Still, employers added 54,000 net new jobs in May, much slower than the average gain of 220,000 a month the previous three months.



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