Service sector jobs see growth for seventh-straight month

WASHINGTON - Job prospects are looking just a little brighter.

The service sector, which makes up 80 percent of the economy, grew for the seventh month in a row, and state aid to preserve jobs for tens of thousands of teachers and other public employees cleared a key hurdle in Congress on Wednesday.

Of course, the job market still has a long way to go. A key employment report due Friday is expected to show the nation actually lost jobs in July, mostly because of temporary census work that came to an end.

"The good news is that the economy is still moving forward, but the bad news is that it is moving at a fairly moderate rate," said Sal Guatieri, senior economist at BMO Capital Markets. "At least we have enough underlying strength in the economy to keep pushing us forward."

The most encouraging development was a private trade group's report that the nation's broad service sector expanded in July. The Institute for Supply Management's index, which covers everything from home builders to medical transcriptionists to Google, rose to 54.3.

A reading of 50 or higher on the service index signals growth, and it hasn't been below that threshold since 2009. The service sector depends heavily on consumer spending, and that has been weak since the recession began in 2007. Americans are saving more and resisting major spending sprees, a trend that the latest government reports confirmed.

Economists also saw positive news on Capitol Hill on Wednesday. The Senate overcame a Republican filibuster and was poised to pass a $26-billion aid package to help states and local school boards cope with their budget problems.

The measure and an extension of long-term jobless benefits that was approved last month would help sustain the recovery, economists said. But they don't expect any real change until employers start hiring at a faster pace.

The service report offered some promise. Businesses reported new orders, an indicator of future business, grew faster. And one measure of hiring expectations also rose in July for only the second time since December 2007. - AP