US service sector grows at fastest pace since 2005

<p>US service sector showed positive results in July.</p>

Companies in the US service sector grew at the fastest pace since December 2005, according to new data released today (August 5th). The Institute for Supply Management said that its service-sector index jumped to 58.7, up from 56 in June. 

The positive data suggests that Americans are increasingly confident that the country's economy is recovering. The services survey covers businesses that employ 90 per cent of the workforce, including retail, construction, health care and financial services firms.

"The services part of the economy looks to be just fine,” Stan Shipley, an economist at International Strategy & Investment Group LLC in New York, told Bloomberg.

"We’re on a trajectory of roughly three per cent GDP growth," he added. 

Despite positive service industry figures, the United States stocks opened lower today, weighed by earnings, including those of retailer Target, and concerns over the health of the Chinese economy after weak service sector data.

Asian stocks also fell today after new figures showed that China's service sector companies were not performing well in July.

The China services purchasing managers’ index (PMI) compiled by HSBC/Markit fell to 50.0 in July from a 15-month high of 53.1 in June.

"The weakness in the headline number likely reflects the impact of the ongoing property slowdown in many cities, as property-related activity, such as agencies and residential services, see less business," Qu Hongbin, HSBC chief economist for China, said in a statement.

The Dow Jones industrial average fell 0.44 per cent, to 16,496.26 at 11:11 ET in New York, while the Standard & Poor's 500-stock index lost 0.30 per cent, to 1,933.25.

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