Service sector growth seen as a sign of stability

The U.S. service sector, the nation's predominant employer, expanded in September for a ninth straight month, although the growth has not been consistent enough to dent the high unemployment rate.

The Institute for Supply Management said Tuesday that its service-sector index rose last month to 53.2 from 51.5 in August.

The rate hit a high point of 55.4 in March, stayed there in April and May, and has fluctuated since. Readings above 50 signal growth.

Weak consumer spending has kept the service industry, which employs about 83 percent of workers in the private sector, from gaining momentum after the recession ended. Economists say yesterday's reading was better than expected, but not enough to change their outlook of high unemployment and slow job growth for the rest of the year.

The survey, along with a surprise move by the central bank of Japan to slash interest rates to near zero, helped to lift stocks. The Dow Jones industrial average gained 193.45, or 1.8 percent, to 10,944.72. The Standard & Poor's 500 index rose 23.72, or 2.1 percent, to 1,160.75. The Nasdaq composite index rose 55.31, or 2.4 percent, to 2,399.83.

Many expect Friday's employment report to show the jobless rate rose in September to 9.7 percent from 9.6 percent, and that 75,000 private-sector jobs were added. They predict the economy will grow at roughly a 2 percent rate for the rest of the year, not enough to lower unemployment.

The survey polls about 350 companies in 18 industries, including health care, retail and shipping. In September, 11 of the industries reported growth. They were led by business management and administrative services and industries that provide information.

There were a few promising signals for winter. A gauge of future business, the new orders index, grew more quickly in September than in August. That suggests demand for services has increased and business activity may grow in the next few months.