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US services companies expand at fastest pace in 8 years as sales, orders and hiring all grow

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In this Friday, June 6, 2014 photo, executive chef Raymond Nicholson prepares an omelette at Corky & Lenny's Restaurant & Deli in Woodmere Village, Ohio. The Institute for Supply Management, a trade group of purchasing managers, issues its index of non-manufacturing activity for July 2014 on Tuesday, Aug. 5, 2014 (AP Photo/Tony Dejak) (The Associated Press)

U.S. services firms grew at the fastest rate in more than eight years in July, the latest sign of an economy picking up speed in the second half of the year.

The Institute for Supply Management says its service-sector index jumped to 58.7, up from 56 in June. Any figure above 50 indicates expansion. June's reading is the highest since December 2005. The ISM is a trade group of purchasing managers.

A measure of sales soared to its highest level in more than three years, and a gauge of new orders jumped to its highest reading in nearly eight years.

Faster growth in services should help accelerate growth and hiring. Manufacturing expanded at the fastest pace in nearly three years in July, according to a separate ISM report released Friday.