Investing.com - Service sector activity in the U.S. grew at the fastest rate in more than three years in July, fuelling optimism over the economic outlook, industry data showed on Tuesday.
In a report, the Institute of Supply Management said its non-manufacturing purchasing manager's index rose to 58.7 last month from a reading of 56.0 in June. Analysts had expected the index to inch up to 56.3 in July.
The Non-Manufacturing Business Activity Index increased to 62.4, which is 4.9 points higher than the June reading of 57.5, reflecting growth for the 60th consecutive month at a faster rate. This is the highest reading for the index since February 2011 when the index registered 63.3.
The New Orders Index registered 64.9, 3.7 points higher than the reading of 61.2 registered in June. This represents the highest reading for the New Orders Index since August 2005 when it registered 65.3.
The Employment Index increased 1.6 points to 56 from the June reading of 54.4 and indicates growth for the fifth consecutive month.
On the index, a reading above 50.0 indicates the non-manufacturing sector economy is generally expanding, below 50.0 indicates the sector is contracting.
According to the data, 16 non-manufacturing industries reported growth in July. Respondents' comments indicate that stabilization and/or improving market conditions have positively affected the majority of the respective industries and businesses."
Following the release of the data, the U.S. dollar added to gains against the euro, with EUR/USD shedding 0.38% to trade at 1.3372, compared to 1.3379 ahead of the data.
Meanwhile, U.S. stock markets were lower after the open. The Dow declined 0.55%, the S&P 500 slumped 0.6%, while the NASDAQ Composite shed 0.8%.
Original headline: U.S. ISM non-manufacturing PMI rises to 41-month high of 58.7 in July
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