Service Economy Saw Stronger Growth in April

The U.S. service sector saw stronger growth in April, a sign that the broader economy may pick up steam after a slow start to 2016.

The Institute for Supply Management on Wednesday said its index of nonmanufacturing economic activity, tracking everything from restaurant meals to dry cleaning, rose to 55.7 in April from 54.5 in March. A reading above 50 indicates that activity is expanding while a reading below 50 points to contraction.

Economists surveyed by The Wall Street Journal had expected an April reading of 54.9.

The U.S. economy faltered in the first quarter, with gross domestic product expanding at a modest 0.5% annual rate, the Commerce Department said last week. The manufacturing sector has been especially hard hit by low oil prices, which have squeezed domestic energy producers, while demand for exports has dimmed because of weak growth overseas and a strong dollar.

The much larger services sector, which employs more than two-thirds of the U.S. nonfarm workforce, has proven more resilient. The ISM gauge has signaled consistent expansion across U.S. service industries since early 2010, though growth began to slow late last year.

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