Service sector expands at fastest pace since 2005

The nation’s service sector expanded in July at the fastest pace in more than eight years as the economy shows signs of accelerating through the summer.

The Institute for Supply Management said Tuesday that its index increased to 58.7, up from 56 in June, the best showing since December 2005.

Any reading above 50 reflects an expanding sector.

The index measuring sales took off to 62.4 up from 57.5 in June, the highest level since February 2011.

New orders reached an eight-year high last month posting a 64.9, up from 61.2 in June, the highest reading since August 2005.

The report follows ISM’s manufacturing report released Friday showed the fastest expansion in nearly three years, another good sign as the economy continues recovering. 

Meanwhile, employment increased to 56 from the June reading of 54.4 percent, which is the fifth straight month of increases.

A separate report from the Commerce Department on Tuesday showed factory orders in June rose 1.1 percent, a three-month high.

All told, 16 non-manufacturing industries reported growth in July.

Respondents said that “conditions are improving” in construction and the “second half of the year is looking promising for increased orders versus last year.”